Railroads have long been a favorite of Warren Buffett, the legendary investor and head of Berkshire Hathway (NYSE: BRK-A
). CSX Corpation (NYSE: CSX
) has been rising lately in recent market action. Greenbrier Companies (NYSE: GBX
) a railroad freight car equipment company, is now a favorite of its insiders.
Over the last six months, Greenbrier Companies is up 20.98%. However, unlike CSX Corporation, it is down in recent trading. Year to date, Greenbrier Companies has fallen 26.61%. For the last week of buying and selling, Greenbrier Companies is off by 9.54%.
The most recent analyst action on Greenbrier Companies was also negative. On January 12, Longbow Research downgraded Greenbrier Companies from Buy to Neutral. Since the downgrade, Greenbrier Companies has plunged from over $26 a share to around $18.50, at present.
As Greenbrier has fallen, there has been insider buying. On April 12, Director Bruce C. Ward acquired 25,000 shares for $18.05 each. After this buy, Mr. Ward increased his stake by 93.56% to 51,722 shares. Before his buying, there had been much insider selling of Greenbrier Companies. Peter Lynch, the former head of Fidelity Magellan fund who guided it to 29.02% annualized returns from 1977 to 1990, stated that the only reasons for insider buying is an expectation that the share price will rise.
There is much on both the balance sheet and income statement to justify the insider buying. The price-to-sales ratio is 0.29. The price-to-earnings ratio is 14.85 and is projected to fall to just 6.36. On a quarterly basis, both sales growth and earnings-per-share growth are soaring. Next year, earnings-per-share growth is expected to increase by 27.85% for Greenbrier Companies.
Now trading around $18.50 a share, the mean analyst target price for Greenbrier Companies over the next year is $30. Despite the downgrade, the mean analyst target rating for Greenbrier Companies is very bullish at 1.70 as 5 is the worst and 1 is the best.