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Image source: Greenbrier.

The railroad industry has been in transition in recent months. Changing conditions in the commodity markets that railroad companies serve have had an effect not just on their operations, but on the companies that serve the railroads. Among those is railcar specialist Greenbrier (NYSE:GBX).

Coming into Wednesday morning's fiscal third-quarter financial report, investors had hoped that the company would manage to survive the worries in the railroad industry to post strong gains in revenue and profit. Yet even though Greenbrier has continued to grow, the pace wasn't what every investor had wanted to see. Let's take a closer look at Greenbrier, and why some continue to worry despite what appears to be solid performance.

Greenbrier keeps revving up its engines
The latest numbers from Greenbrier seem, on their face, to reflect continued strength in the railcar market. Revenue climbed 20%, to a new record of $714.6 million, and Greenbrier grew its net income by 27%, to $42.8 million, producing diluted earnings of $1.33 per share.

The problem, though, was that many investors had much higher expectations for the company, hoping for around $740 million in sales producing earnings of $1.63 per share. Even after adjusting for one-time nonrecurring costs of $0.16 per share, Greenbrier still fell short on the bottom line.

A closer look at Greenbrier's major segments shows pockets of strength and weakness. As we've seen in previous quarters, Greenbrier's manufacturing business remains rock solid, with sales up by almost 40% from year-ago levels. A rise in railcar deliveries bolstered the segment's results, and the company also managed to boost its margins considerably through better pricing practices, a more favorable mix of product sales, and overall improved efficiency levels. Deliveries climbed by 500 units from the fiscal second quarter, hitting the 5,700 mark.

Elsewhere, Greenbrier struggled. Sales of wheels and parts were again down substantially from year-ago levels, falling by more than 30%. The revenue drop came from lower volumes for wheel and component sales, and margins fell markedly due to weakness in the scrap-metal market, weighing on its ability to maximize profit potential from wheels. Leasing and services revenue also fell, dropping 12%, as maintenance and transportation costs have hurt the company's margins in recent months.

Greenbrier executives don't seem concerned about the railcar-maker's future. In CEO William Furman's words, "Our diversified and integrated business model continues to pay off, with record revenue, adjusted EBITDA, and deliveries this quarter." Furman also heralded its rising gross margin figures as a sign of greater efficiency for the company as it responds to the impact of falling oil prices on its energy-industry customers.

What's next for Greenbrier?
Greenbrier chose not to make any changes to its guidance for fiscal 2015, although it did note that it will exclude the non-recurring costs associated with a potential acquisition that fell through from its adjusted financial outlook for the remainder of the year. Longer term, though, Greenbrier's biggest asset is its backlog, with railcar orders totaling 45,100 units at an estimated value of $4.86 billion. Although those numbers haven't changed much from where they were last quarter, Greenbrier does appear to be weathering any anticipated storm from the reduced oil production that many analysts have anticipated.

Greenbrier also continued to invest in itself during the quarter. The railcar-maker's stock buyback program has been modest in size, with repurchases of just more than 28,000 shares at a cost of about $1.5 million having little impact on the company's overall results. The small size of the buyback program might seem surprising as the stock lingers near its lowest levels of the year, but Greenbrier remains conservative in terms of preserving capital. Its dividend yield of just 1.2% makes clear that Greenbrier wants the financial flexibility to consider all options with its available cash.

Greenbrier shareholders weren't entirely pleased with the company's results, but their initial push downward immediately after the announcement gave way to somewhat more optimism, with the stock falling less than 1% immediately before the market opened for trading Wednesday morning. As long as Greenbrier can keep serving the railroad industry well through its transitional period, investors should remain focused on its long-term growth trajectory rather than short-term turmoil.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends The Greenbrier Companies. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.