Here's Why Investors Should Steer Clear Of Genesee & Wyoming
Zacks Investment Research | Nov 17, 2019 08:15PM ET
Genesee & Wyoming (NYSE:GWR) , like its peers in the railroad space, is suffering from soft freight demand. As freight revenues account for bulk of its revenues (69.8% in the first nine months of 2019), freight-related weakness is hurting the top line. In the first nine months of 2019, revenues declined 3.4% on a year-over-year basis.
Dismal performance of the Australian (which is 51% owned by the company) and U.K./European units is an added headwind. Revenues from these units declined 34.6% in the first nine months of 2019. Moreover, Genesee & Wyoming has a significant exposure to UK/Europe. In the first nine months of 2019, the company’s U.K./European operations accounted for approximately 27.3% of its total revenues. This significant exposure might be a cause for concern due to complications that are likely to arise once the UK leaves the EU. Additionally, high capital expenses are weighing on the bottom line.
Following the above-mentioned headwinds Genesee & Wyoming has underperformed its Zacks Investment Research
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