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Here's Why Textainer Group Holdings Limited Jumped 10.8% in February

By Matthew DiLallo - Mar 5, 2016 at 8:00AM

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The shipping container lessor’s stronger-than-expected fourth-quarter results pleased investors.

Image source: Textainer Group Holdings Limited.

What: Shares of Textainer Group Holdings (TGH -0.26%) enjoyed a bit of a rebound in February, ending the month up 10.8%. That strong showing was primarily due to the company's better-than-expected fourth-quarter results.

So what: Textainer reported revenue of $129.3 million, which was down 4% from the year-ago quarter. That decline is due to a number of factors, including a decline in rental rates, lower utilization, a decrease in its fleet size, and weaker container prices. That pushed earnings down as well, with adjusted net income slumping 71% to $12.7 million, or $0.22 per share. That said, earnings were $0.05 per share higher than the consensus estimate, which is what investors really liked seeing.

While the report was certainly weaker than the prior period due to slowing global economic conditions, the company is well positioned for the downturn with the least leverage and lowest operating costs in its peer group. Furthermore, most of its fleet is under long-term contract, with only 8.5% of its leases maturing this year. That solid foundation will actually enable the company to take advantage of the situation because it has the financial capacity to buy containers at the low point in the cycle so that it can generate stronger returns when conditions improve.

Now what: While it wasn't a great quarter, Textainer did manage to beat muted expectations. In addition, it's fairly well insulated from the downturn and is actually in a position to strengthen its long-term position. That's giving investors' confidence that while conditions might be rough right now, the long-term thesis still remains intact.

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