New Regulations Could Further Buoy Railcar Companies

BMI View: Railcar companies look set to benefit from more stringent regulatory standards on tank cars used for crude transportation in North America. While recent regulatory changes have largely been priced in by markets since we highlighted this view back in February, should the US follow Canada's lead with more stringent regulations, there could still be upside for the share price of companies like Greenbrier and Trinity, if to a lesser extent than we had previously seen.

We had previously highlighted our expectation for more stringent crude-by-rail regulations to be put in place in North America, and that this would likely benefit railcar companies, suggesting potential for upside to the share price of companies like Trinity and Greenbrier ( see 'Railcar Companies To Benefit From Forthcoming Regulations', February 13). Since then, we have seen 37.4% gains for Trinity, whilst Greenbrier is up 26.6%, as the Canadian government has moved to put in place rules requiring the retrofitting or replacing of older tank cars.

More Stringent Regulations Coming Into Force...

Huge Push Higher For Railcar Companies
Greenbrier Share Price (USD), RSI & MACD

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This article is tagged to:
Sector: Oil & Gas, Country Risk
Geography: North America, Canada, United States

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