Monday, September 16, 2024
Mark Reichman, Managing Director, Equity Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Pure play manufacturer. FreightCar America, Inc. is a diversified manufacturer of railroad cars and rail car components. The company designs and manufactures a broad variety of railroad car types for the transportation of bulk commodities and containerized freight products primarily in North America. The company recently reported strong second-quarter financial results and appears poised for greater scale and margin expansion as it increases its market share and expands its product suite.
Expected redemption of high-cost preferred stock. We have assumed the company could redeem its high-cost preferred shares using a private credit term loan. For the sake of simplicity, we have assumed this occurs just prior to 2025. Based on the company’s strong cash flow profile and outlook, we estimate the rate on a $100 million private credit term loan could approximate the secured overnight financing rate (SOFR) plus 600 basis points or 11.33%. We note that the amount of the term loan and the interest rate could vary from our estimates. If the loan amount or interest rate is lower, interest expense could be lower.
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This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
