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Why American Railcar's Shares Slipped Off the Track

By Travis Hoium - Apr 25, 2013 at 2:47PM

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Is this meaningful or just another movement?

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of American Railcar Industries (NASDAQ: ARII) fell 11% today after the company released earnings.

So what: First quarter revenue was up 7%, to $195.1 million, falling just short of the $196.3 million estimate. The real miss was on the bottom line, where net income jumped 49%, to $17.9 million, or $0.84 per share, but was short of a $0.96 estimate from Wall Street. 

Now what: This wasn't a bad earnings report; it just fell short of what investors had expected. Demand was strong in the manufacturing segment, partially because of improved mix in the quarter. Shares are now trading at just 11 times trailing earnings, and I think that consistent profit growth will evenually push shares higher.

Interested in more info on American Railcar Industries? Add it to your watchlist by clicking here.

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