Third-quarter earnings season has been fairly solid so far, at least in the mainstream. Outside in the shadows, however, it has been hit or miss. Thursday's report by double-net FreightCar America Inc. (RAIL) was disappointing to say the least. The company missed on revenue ($72 million versus $87.8 million consensus) and on its bottom line (loss of 73 cents a share versus a consensus 17-cent loss).
In part, FreightCar America blamed manufacturing difficulties at its "state of the art" Shoals, Alabama, plant for the poor results. In addition, the nine-cent quarterly dividend was suspended, which is somewhat curious given the continued strength of the balance sheet even with the bad quarter.
FreightCar America ended the quarter with $121.2 million, or $9.85 per share, in cash and marketable securities, excluding $6 million in restricted cash. That was down from $132.2 million, or $10.76 a share, last quarter. The company's backlog for railcars increased to 3,317 cars valued at about $291 million, while expectations for full-year 2017 deliveries were increased by 300 units to between 4,600 and 4,800 railcars.
RAIL shares took a 12% haircut during Thursday's trading, but that represented a day-end recovery; at one point, shares were down more than 21% from Wednesday's close. While these results were disappointing, the company remains cheap from a balance sheet perspective, trading at just 1.44 times net current asset value and less than tangible book value. In an economy that appears to be doing a bit better, results should be improving and we'll see if the company can start getting its act together in the fourth quarter and beyond.
Meanwhile, broken growth story Fitbit Inc. (FIT) put up numbers that were slightly better than expectations after the market closed Wednesday, with a loss per share that was three cents better than the expected four-cent loss and revenue of $393 million slightly better than the $391.7 consensus.
However, the market was less than impressed and shares were down 4.5% on the day. This company can do no right in investors' eyes, and who can blame them as revenues have fallen precipitously, the wearables market has become far more competitive, and this former (short-lived as it was) growth darling has seen its shares fall from the $48 level in the summer of 2015, to around $6.
At this point however, with $2.81 per share in cash, Fitbit is trading like an option on the company getting back in the game. Management expects it to be cash flow positive next quarter, and early reports on its new smartwatch the Ionic have been somewhat favorable. We'll see about all of this, but make no mistake-- the market largely hates this company, which is a situation that I like. That does not mean it will pan out, but it is one of the things that make this game so much fun -- or painful, depending on the outcome. FIT currently trades at 2.39 times net current asset value, which is ridiculously low for most companies, but little is expected from this one.