3 Stocks to Watch From the Transport Equipment & Leasing Industry

Core Viewpoint - The Zacks Transportation - Equipment and Leasing industry is positioned to benefit from shareholder-friendly initiatives, despite facing challenges such as inflation, high interest rates, and supply-chain disruptions [1][5]. Industry Overview - The industry encompasses companies that provide equipment financing, leasing, and supply-chain management services, including aircraft, railcar, and intermodal container lessors [2]. - Key customer sectors include automotive, electronics, transportation, grocery, lumber, food service, and home furnishing [2]. Key Trends Influencing the Industry - Shareholder Returns: Companies are reactivating shareholder-friendly measures, with GATX announcing a 5.5% dividend increase and Wabtec a 17.6% increase, alongside a $1 billion share buyback authorization [3][4]. - Economic Uncertainty: The Federal Reserve's interest rate cut has not alleviated inflation concerns, which remain above the target, impacting finance costs and potentially weakening borrowing activities [5]. - Supply-Chain Issues: Ongoing supply-chain disruptions and high operating costs are limiting growth, with costs expected to remain elevated [6]. Industry Performance - The Zacks Transportation - Equipment and Leasing industry has outperformed the S&P 500 and broader sector over the past year, gaining 69.4% compared to the S&P 500's 40.5% [8]. - The industry currently trades at a forward P/E ratio of 13.83X, below the S&P 500's 22.06X and the sector's 16.35X [9]. Company Highlights - Wabtec Corporation (WAB): Expected EPS for 2024 is between $7.45 and $7.65, with a growth rate of 26.86%. The company has a strong earnings surprise history, exceeding estimates in three of the last four quarters [10][11]. - The Greenbrier Companies, Inc. (GBX): Expected earnings growth rate for 2024 is 46.46%, with a solid earnings surprise history, outperforming estimates in two of the last four quarters [12]. - Ryder System (R): The company has a consistent dividend payment history of over 48 years and has outperformed earnings estimates in all four recent quarters [13].