UBS Maintains a 'Sell' on American Railcar Industries (ARII); Q2 Substantially Better Than Expected

UBS maintains a 'Sell' on American Railcar Industries (NASDAQ: ARII), raises PT from$14 to $16.

UBS analyst says, "700 orders in 2Q and >2,200 orders since June 30 - ARI shipped 1,040 railcars in 2Q vs. 370 in 2Q10 and 670 in 1Q11. Backlog of 5,290 rose from 1,050 at the end of last year, but declined from 5,630 last quarter. However, that backlog does not include the >2,200 railcar orders received after the close of the quarter. Management expects 56% of the backlog to be delivered in 2011 (a portion of which are for ARI’s leasing business), and production rates are ramping up sharply (ARI expects +300-400 incremental rail cars in each 3Q/4Q). We are raising our EPS estimates for 2012 and beyond to reflect higher than expected order rates." (FY12 EPS estimate from $0.70 to $1.00)

"While 2Q showed substantial signs of improvement in margins and deliveries, ARI is trading at ~13.5x prior peak (‘07) earnings despite our view that it will take years to return to similar earnings levels."

For more ratings news on American Railcar Industries click here and for the rating history of American Railcar Industries click here.

Shares of American Railcar Industries closed at $23.60 yesterday.

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Walmart (WMT) PT Lowered to $130 at UBS on Investment Narrative's Competing Dynamics
• BMO starts chip stocks coverage: Here are its preferred picks
• Bernstein remains bullish on SpaceX but sees challenges in telecom ambitions