FreightCar (RAIL) Fundamentals Sound, Outlook Bleak
January 15, 2010 2:18 PM
Railcar market player FreightCar America’s (NASDAQ: RAIL) near-term outlook is nothing to cheer about, says Longbow Research. FreightCar’s break-even point is 2,500 railcars but the company is expected to handle deliveries of just 1,700 cars in 2010.
The delivery book for the next few quarters is not very robust. The market for coal-carrying railcars has declined significantly and this is bad news for FreightCar. A more positive outlook on the shares is possible if the coal segment improves or if international opportunities arise ahead of schedule.
Investors with a 2-3 year outlook could consider acquiring the shares at below the $20 mark. Fluctuations in commodity prices, adverse economic conditions, and cyclical risks to order estimates are the particular downside risks to FreightCar.
