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FreightCar America, Inc. Beat Analyst Profit Forecasts, And Analysts Have New Estimates

Shareholders of FreightCar America, Inc. (NASDAQ:RAIL) will be pleased this week, given that the stock price is up 14% to US$4.93 following its latest second-quarter results. Revenues US$57m fell badly (22%!) short of analyst expectations, but FreightCar America pulled a rabbit out of the hat when it came to earnings, with an unexpected statutory profit of US$0.58 per share well above the loss that the analystwas modelling. This is an important time for investors, as they can track a company's performance in its report, look at what expert is forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analyst has changed their earnings models, following these results.

See our latest analysis for FreightCar America

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After the latest results, the solitary analyst covering FreightCar America are now predicting revenues of US$364.5m in 2022. If met, this would reflect a substantial 29% improvement in sales compared to the last 12 months. Losses are forecast to balloon 22% to US$0.69 per share. Before this latest report, the consensus had been expecting revenues of US$340.9m and US$1.25 per share in losses. So it seems there's been a definite increase in optimism about FreightCar America's future following the latest consensus numbers, with a considerable decrease in the loss per share forecasts in particular.

It will come as no surprise to learn thatthe analyst has increased their price target for FreightCar America 32% to US$5.50on the back of these upgrades.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. For example, we noticed that FreightCar America's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 65% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 21% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 5.7% per year. So it looks like FreightCar America is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most obvious conclusion is that the analyst made no changes to their forecasts for a loss next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. There was also a nice increase in the price target, with the analyst clearly feeling that the intrinsic value of the business is improving.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have analyst estimates for FreightCar America going out as far as 2023, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 5 warning signs with FreightCar America (at least 3 which don't sit too well with us) , and understanding them should be part of your investment process.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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