Trade worries hit stocks once again after the U.S. threatened to levy $4 billion in tariffs on Europe in a dispute over aircraft subsidies, but shares rebounded late in the session and major benchmarks finished in the green. The Dow Jones Industrial Average (DJINDICES:^DJI) had a small gain and the S&P 500 (SNPINDEX:^GSPC) closed at a record high. Real estate was the strongest sector and energy was the weakest.
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Operational issues continue to plague Greenbrier
Shares of Greenbrier went off the track today, tumbling 6.9% after the railroad freight car manufacturer reported disappointing third-quarter results and lowered profit guidance for the full year. Revenue grew 33% to $856 million, below the $862 million analyst consensus. Earnings per share fell 46% to $0.46, but that figure included a $0.30-per-share noncash goodwill impairment charge and $0.13 per share in acquisition costs. Excluding those, adjusted EPS of $0.89 still missed expectations of $0.95.
Issues with Greenbrier's rail car repair unit and overseas operations, a familiar set of challenges, hurt the company's profit in the quarter. However, orders were healthy. Despite a "choppy global freight railcar market," according to CEO William Furman, the company took orders for 6,500 rail cars, the same number it delivered in the quarter and up from 4,500 in orders in Q2.
Greenbrier has a backlog of 26,100 units worth $2.7 billion, making revenue and cash flow very predictable for the next few quarters. The company expects order activity to increase in 2020, and if it can solve its execution issues, profit should pick up as well.
A simply good quarter from Simply Good Foods
Wellness-oriented food company Simply Good Foods, owner of the Atkins and SimplyProtein brands, reported strong sales and profit growth in the fiscal third quarter, and shares moved up 2%. Revenue increased 30.1% to $139.5 million and earnings per share grew 60% to $0.16. Analysts were expecting the company to earn $0.14 per share on sales of $121 million.
Top-line momentum carried over from a strong second quarter, with U.S. retail takeaway, the volume at the point of sale, up 19.5% over the period a year ago. Revenue outpaced retail sales due to shifts in inventory at some key retailers. Gross margin decreased a percentage point due a change in the mix of products sold.
Simply Good Foods is seeing its low-carb, low-sugar messaging resonate with consumers. Given the strong third-quarter performance, some investors may have hoped for higher Q4 guidance, which might explain the stock's modest gain today. June retail takeaway growth slowed to 16.2%, but the company is facing a tough comparison next quarter.