Rail transportation company Greenbrier (NYSE: GBX) reported revenue ahead of Wall Streets expectations in Q4 CY2025, but sales fell by 19.4% year on year to $706.1 million. The company’s full-year revenue guidance of $2.95 billion at the midpoint came in 2.1% above analysts’ estimates. Its GAAP profit of $1.14 per share was 31% above analysts’ consensus estimates.

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Company Overview

Having designed the industry’s first double-decker railcar in the 1980s, Greenbrier (NYSE: GBX) supplies the freight rail transportation industry with railcars and related services.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Regrettably, Greenbrier’s sales grew at a tepid 4.8% compounded annual growth rate over the last five years. This fell short of our benchmark for the industrials sector and is a rough starting point for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Greenbrier’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 12.2% annually. Greenbrier isn’t alone in its struggles as the Heavy Transportation Equipment industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time.

We can dig further into the company’s revenue dynamics by analyzing its number of units sold, which reached 3,700 in the latest quarter. Over the last two years, Greenbrier’s units sold averaged 20.3% year-on-year declines. Because this number is lower than its revenue growth, we can see the company benefited from price increases.

This quarter, Greenbrier’s revenue fell by 19.4% year on year to $706.1 million but beat Wall Street’s estimates by 7.7%.

Looking ahead, sell-side analysts expect revenue to decline by 5.2% over the next 12 months. Although this projection is better than its two-year trend, it’s tough to feel optimistic about a company facing demand difficulties.

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Operating Margin

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Greenbrier was profitable over the last five years but held back by its large cost base. Its average operating margin of 6.9% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

On the plus side, Greenbrier’s operating margin rose by 7.2 percentage points over the last five years, as its sales growth gave it operating leverage.

In Q4, Greenbrier generated an operating margin profit margin of 8.7%, down 4.1 percentage points year on year. Since Greenbrier’s gross margin decreased more than its operating margin, we can assume its recent inefficiencies were driven more by weaker leverage on its cost of sales rather than increased marketing, R&D, and administrative overhead expenses.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Greenbrier’s EPS grew at an astounding 43.9% compounded annual growth rate over the last five years, higher than its 4.8% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Greenbrier’s earnings to better understand the drivers of its performance. As we mentioned earlier, Greenbrier’s operating margin declined this quarter but expanded by 7.2 percentage points over the last five years. Its share count also shrank by 2.6%, and these factors together are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Greenbrier, its two-year annual EPS growth of 32.3% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q4, Greenbrier reported EPS of $1.14, down from $1.72 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. We also like to analyze expected EPS growth based on Wall Street analysts’ consensus projections, but there is insufficient data.

Key Takeaways from Greenbrier’s Q4 Results

It was good to see Greenbrier beat analysts’ EPS expectations this quarter. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this quarter featured some important positives. The stock remained flat at $53.70 immediately following the results.

Greenbrier put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).