Morning Commentary: Greenbrier higher outright but quiet after strong earnings report

By Rebecca Melvin

New York, April 7 – Greenbrier Cos. Inc.’s convertibles traded higher on an outright basis Tuesday after the Lake Oswego, Ore.-based railcar company reported quarterly results that beat estimates and raised its full-year guidance again.

Greenbrier’s 3.5% convertibles due 2018 changed hands at about 164, which was up from 157 to 158 on Monday, according to Trace data. Greenbrier shares were up $1.81, or 3%, to $62.41 last, but initially they had popped by as much as 5.6% on the heels of the earnings news.

The convertible bond’s price is equal to parity, a Connecticut-based trader said.

For its second fiscal quarter, Greenbrier posted a profit of $50.4 million, or $1.57 a share, up from $15.6 million, or 50 cents a share, in the year-earlier period. Revenue rose 26% to $630.2 million.

Analysts expected earnings of $1.20 a share on revenue of $613.9 million.

For its fiscal year, Greenbrier now expects earnings of $5.65 to $5.95, up from its previous outlook of $5.20 to $5.50, which was raised in January. The company also raised revenue guidance to $2.6 billion to $2.7 billion for the year, compared $2.6 billion in January.

Overall the convertibles market was quiet, including the Greenbrier convertibles, a New York-based trader said.

U.S. equities continued to trade better, and stock markets in Europe, which reopened after their Easter observance break, were also higher on the heels of a surprise rally in U.S. equities on Monday.

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