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Is a Beat Likely for Trinity Industries (TRN) in Q2 Earnings?

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Trinity Industries, Inc. (TRN - Free Report) is scheduled to report second-quarter 2018 results on Jul 25, after market close.

In the first quarter of 2018, the company delivered a positive earnings surprise of 36.4%. Trinity Industries also surpassed the Zacks Consensus Estimate for earnings in each of the trailing four quarters, with an average beat of approximately 19.9%.

Additionally, the stock has impressive earnings history, which is well reflected in its price performance. In a year’s time, Trinity Industries has rallied 32.7% compared with the Zacks Equipment and Leasing industry’s 11.5% increase.

One-Year Price Performance

 

 

Factors Likely at Play

Trinity Industries’ second-quarter results are anticipated to benefit from its Rail Group unit’s impressive performance. Higher railcar deliveries might aid segmental results. Demand for rail cars is likely to increase on the back of industrial production gathering steam and consistent business investments. The reduction in effective tax rate due to the new tax law should boost the bottom line in the second quarter.

Additionally, the company’s efforts to reward shareholders through dividends and share buybacks are encouraging. An update on the issue is expected on second-quarter conference call. Trinity might also increase its dividend payout, particularly owing to the savings induced by the new tax law. An update on its plans to spin off the infrastructure-related business is expected on the same conference call. The spin-off is likely to be completed by year end.

However, the Inland Barge Group, which recorded discouraging results in the first quarter, is expected to continue with its poor run in the second quarter as well. Also, the Energy Equipment Group might come up with a below-par performance mainly due to lower volumes in the segment's structural wind towers product line.

What Does the Zacks Model Unveil?

Our proven model shows that Trinity Industries is likely to beat on earnings in the second quarter. This is because the stock has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase its odds of an earnings surprise.

Earnings ESP: Trinity Industries has an Earnings ESP of +6.38% as the Most Accurate Estimate of 40 cents is 2 cents higher than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Trinity Industries carries a Zacks Rank #2 (Buy), which when combined with a positive ESP makes us confident of an earnings beat.

Conversely, we caution against stocks with a Zacks Ranks #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Trinity Industries, Inc. Price and EPS Surprise

 

Trinity Industries, Inc. Price and EPS Surprise | Trinity Industries, Inc. Quote

Other Stocks to Consider

Investors interested in the broader Transportation sector may consider stocks like United Parcel Service, Inc. (UPS - Free Report) , Expeditors International of Washington, Inc. (EXPD - Free Report) and Canadian National Railway Company (CNI - Free Report) asthese too possess the right combination of elements to come up with an earnings beat in their next releases.

UPS has an Earnings ESP of +0.62% and a Zacks Rank of 3. The company will report second-quarter earnings on Jul 25.

Expeditors has an Earnings ESP of +1.54% and a Zacks Rank #1 (Strong Buy). The company will report second-quarter earnings on Aug 7. You can see the complete list of today’s Zacks #1 Rank stocks here.

Canadian National has an Earnings ESP of +1.83% and a Zacks Rank of 3. The company will report second-quarter earnings on Jul 24.

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