-$7.60
$218.30
bear -$7.60
base $147.40
bull $218.30
margin of safety $70.00
market price* $165.51
GATX leases railcars, and the shares are a small equity slice on top of a very large, debt-financed asset base. Its Rail North America segment leases tank cars and freight cars to shippers under multi-year leases; Rail International does the same in Europe and India; and it earns income from aircraft-engine leasing (a joint venture with Rolls-Royce and its own engine leasing business) and tank container leasing (Trifleet). On January 1, 2026 it closed the purchase of about 101,000 railcars from Wells Fargo for roughly $4.2 billion through a joint venture (GABX) in which GATX owns 30% and Brookfield 70%. GATX consolidates GABX and guarantees its $2.96 billion term loan. Revenue in 2025 was $1.74 billion and net income $333 million. How we measured earnings. For a railcar lessor, spending on new cars is the business, so we separate the cost of standing still from the cost of growing. We treat the cash needed to replace the fleet capacity used up each year (depreciation, plus the book value of cars sold, with sale proceeds credited back) as the true upkeep cost, and treat purchases beyond that as growth. In 2025 that meant about $624 million of upkeep against $1,317 million of total fleet spending. Gains on car sales ($99 million to $140 million a year since 2021) recur and are included. Stock compensation is deducted as a real cost. The company does not report a separate working-capital line; small items sit in an 'Other' line that we left in. On this basis owner earnings per share were $5.86 (2021), $7.54, $6.75, $8.23 and $8.66 (2025). We then add back cash interest to see what the business earns before its lenders, and value the business first and subtract debt second: $11.32, $13.19, $14.03, $17.98 and $20.17 per share for 2021 through 2025. As a cross-check, 2025 owner earnings of $310.8 million equal net income plus the non-cash items in the cash flow statement, with no gap. Everything is discounted at 6%. Base case: about $147 a share. We start from the three-year median (2023 to 2025) of $17.98 per share, because lease rates reset upward in 2023 and the fleet is larger than in earlier years. Growth in the most recent year was 12.1%; we assume 12% for 2026, which brings the figure to about $20.14, essentially the level already reached in 2025, so this is a return to a demonstrated level rather than new growth. Two named sources of growth are then credited. First, leases renewing at higher rates: the renewal rate change on the North American fleet was +21.9% in 2025 and +26.7% in 2024, average renewal terms are about 58 months, and the 2025 annual report expects 2026 renewals to price above expiring rates. We credit only 4% a year for 2027 to 2030, well below what full pass-through would imply, and note that the renewal gain has already slowed from 2024 to 2025. Second, reinvestment of retained cash flow into more cars, a practice GATX has sustained through downturns, credited at 2% a year for 2031 to 2035. The acquired GABX portfolio is added at about $210 million a year of pre-interest cash flow, held flat. GABX's results are not shown separately in the data we reviewed, so this is our estimate from the first half of 2026: net income up $35 million, interest up $103 million and deferred tax up $4 million versus the first half of 2025, or about $284 million a year in total, less roughly $78 million a year of ordinary growth (the 2025 increase). After 2035 we hold cash flow flat for a further 30 years and assume nothing after that, because our upkeep charge is based on historical cost and understates the cost of replacing cars. Left out: further fleet growth financed with new borrowing (including the remaining deliveries under the Trinity supply agreement, 5,720 of 8,133 ordered cars delivered at the end of 2025), expansion in India and engine leasing, the option to buy out Brookfield, and any rate gains beyond 2030, because none is secured or repeatable without new debt. Business value is about $16.4 billion ($458 a share). Net debt is about $11.0 billion, and Brookfield's share of GABX is about $0.14 billion, leaving about $5.3 billion for shareholders, or $147.4 a share. Debt. Borrowings were $12.33 billion at June 30, 2026, including the $2.96 billion GABX loan, against $747 million of cash, of which we count $647 million as excess. The average interest rate on borrowings was 4.78% at the end of 2025, about 1.2 points below our 6% yardstick, with an average remaining life of roughly seven years, which we value at about $0.7 billion in shareholders' favor, so net debt is $12.33 billion less $0.65 billion cash less $0.70 billion, or $10.99 billion. Scheduled repayments at the end of 2025 were $653 million in 2026, $855 million in 2027, $825 million in 2028, $907 million in 2029, $3.66 billion in 2030 (including the GABX loan) and $5.6 billion after that. The main bank facilities require a fixed charge coverage ratio of at least 1.2 for GATX Corporation. We did not deduct the $0.8 billion book value of Brookfield's stake in full because, on our method, GABX is worth only a little more than its loan; if Brookfield's stake is worth its book value, every case would be lower by roughly $0.5 to $0.7 billion, about $14 to $19 a share. Bear case: about negative $7.6 a share. Named risks: gains on car sales fall by half (they were $39.5 million in 2020 against $140 million in 2025), renewals price about 5% below expiring rates in the more economically sensitive car types, which the 2025 annual report flags as facing a more challenging environment, and GABX earns about $160 million a year. Cash flow before lenders falls to about $19.4 a share by 2030 (about $695 million in total, still above the roughly $590 million a year of interest at the current average rate). The business is then worth about $10.7 billion against $11.0 billion of net debt and no value left for Brookfield's stake: shareholders' equity is worth about negative $0.27 billion. In this case the company owes slightly more than the business is worth. The 2030 repayment wall and the GATX guarantee of the GABX loan are the pressure points. Bull case: about $218 a share. GATX's own levers work well: renewal gains persist at 7% a year for 2027 to 2030 (about a quarter of the pace of the last two years), the first year is 15%, later reinvestment adds 3% a year, and GABX earns about $265 million a year. Business value is about $19.5 billion, less $11.0 billion of net debt and $0.7 billion for Brookfield, leaving $7.8 billion. What changed since the prior review. Our August 2026 view was a base of $129, bear $62 and bull $174. That earlier work valued the after-interest owner earnings at an 11% required return. This update values the whole business at 6% first and then subtracts borrowings, which makes the shares more sensitive to leverage: the base rises to $147 because the Wells Fargo portfolio is now closed and the renewal record is treated as a named driver, the bull rises to $218, while the bear falls below zero because the debt is now charged explicitly against a downside cash flow. What would make this wrong. The estimate is highly sensitive: a 10% change in business value moves the base by about $46 a share. Higher-than-expected upkeep costs (railcar replacement costs above historical depreciation), a fall in lease rates, lower sale gains or weaker GABX results would each reduce it; renewals continuing at more than 4% a year or GABX earning well above $210 million would raise it.