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Trinity Industries (TRN) Down 2.2% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Trinity Industries (TRN - Free Report) . Shares have lost about 2.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Trinity Industries due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Second-Quarter Earnings
The company’s earnings (excluding 5 cents from non-recurring items) of 48 cents per share beat the Zacks Consensus Estimate of 38 cents. Also, the bottom line soared 45.5% year over year. Results were aided by a low effective tax rate of 23.9%. The comparable figure in the second quarter of 2017 was 40.9%.
Total revenues of $942.3 million however, missed the Zacks Consensus Estimate of $997.6 million. Nevertheless, the top line improved 4.1% from the year-ago quarter.
Segmental Results
The Rail Group recorded revenues of $575.2 million, up 23.5% year over year. Segmental operating profit came in at $57.7 million, up 57.2% on a year-over-year basis. This upside has been driven by higher railcar deliveries and better operational efficiencies. Notably, the group delivered 5,105 railcars and received orders for 8,320 railcars during the second quarter compared with 4,055 and 5,705, respectively, in the year-ago period.
The Railcar Leasing and Management Services Group recorded revenues of $213.4 million, up 11.1% from the prior-year period. Segmental operating profit came in at $91.8 million, down 17.1% from the year-earlier quarter. Revenues increased as a result of higher sales of railcars owned as well as additions to the lease fleet. However, as expected, average lease rates in the quarter were low, partly affecting revenue growth. Operating profit declined on account of lower profit from railcar sales and higher cost of sales.
The Inland Barge Group recorded revenues of $42.9 million, up 28.1%. Segmental operating profit skyrocketed more than 100% to $2.9 million in the reported quarter. Segmental results benefited from higher barge deliveries.
The Energy Equipment Group recorded revenues of $199.3 million, down 19.7% year over year. Operating profit in the segment was $13.1 million, down 45.6%. Decrease in volumes in the segment's wind towers product line among other factors led to this downside.
The Construction Products Group recorded revenues of $155.6 million, up 18.5% year over year. Segmental operating profit was $31.4 million, up 41.4%. The increase in revenues was mainly owing to higher volumes in the construction aggregates business and other businesses.
Liquidity
At the end of the second quarter, the company had $612.7 million of cash and cash equivalents compared with $778.6 million at last year-end. Meanwhile, debt totaled $3,227.3 million as of Jun 30, 2018 compared with $3,242.4 million as of Dec 31, 2017.
Bullish 2018 Outlook
For the full year, the company estimates earnings per share (excluding transaction costs) of $1.45-$1.65. Previously, the estimate was in the $1.20-$1.40 range.
The company now expects full-year effective tax rate of 25% compared with 36.2% in 2017. Prior forecast had called for an effective tax rate of 24%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 22.52% due to these changes.
VGM Scores
Currently, Trinity Industries has a poor Growth Score of F, however its momentum is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for momentum investors than value investors.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Trinity Industries has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Trinity Industries (TRN) Down 2.2% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Trinity Industries (TRN - Free Report) . Shares have lost about 2.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Trinity Industries due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Second-Quarter Earnings
The company’s earnings (excluding 5 cents from non-recurring items) of 48 cents per share beat the Zacks Consensus Estimate of 38 cents. Also, the bottom line soared 45.5% year over year. Results were aided by a low effective tax rate of 23.9%. The comparable figure in the second quarter of 2017 was 40.9%.
Total revenues of $942.3 million however, missed the Zacks Consensus Estimate of $997.6 million. Nevertheless, the top line improved 4.1% from the year-ago quarter.
Segmental Results
The Rail Group recorded revenues of $575.2 million, up 23.5% year over year. Segmental operating profit came in at $57.7 million, up 57.2% on a year-over-year basis. This upside has been driven by higher railcar deliveries and better operational efficiencies. Notably, the group delivered 5,105 railcars and received orders for 8,320 railcars during the second quarter compared with 4,055 and 5,705, respectively, in the year-ago period.
The Railcar Leasing and Management Services Group recorded revenues of $213.4 million, up 11.1% from the prior-year period. Segmental operating profit came in at $91.8 million, down 17.1% from the year-earlier quarter. Revenues increased as a result of higher sales of railcars owned as well as additions to the lease fleet. However, as expected, average lease rates in the quarter were low, partly affecting revenue growth. Operating profit declined on account of lower profit from railcar sales and higher cost of sales.
The Inland Barge Group recorded revenues of $42.9 million, up 28.1%. Segmental operating profit skyrocketed more than 100% to $2.9 million in the reported quarter. Segmental results benefited from higher barge deliveries.
The Energy Equipment Group recorded revenues of $199.3 million, down 19.7% year over year. Operating profit in the segment was $13.1 million, down 45.6%. Decrease in volumes in the segment's wind towers product line among other factors led to this downside.
The Construction Products Group recorded revenues of $155.6 million, up 18.5% year over year. Segmental operating profit was $31.4 million, up 41.4%. The increase in revenues was mainly owing to higher volumes in the construction aggregates business and other businesses.
Liquidity
At the end of the second quarter, the company had $612.7 million of cash and cash equivalents compared with $778.6 million at last year-end. Meanwhile, debt totaled $3,227.3 million as of Jun 30, 2018 compared with $3,242.4 million as of Dec 31, 2017.
Bullish 2018 Outlook
For the full year, the company estimates earnings per share (excluding transaction costs) of $1.45-$1.65. Previously, the estimate was in the $1.20-$1.40 range.
The company now expects full-year effective tax rate of 25% compared with 36.2% in 2017. Prior forecast had called for an effective tax rate of 24%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 22.52% due to these changes.
VGM Scores
Currently, Trinity Industries has a poor Growth Score of F, however its momentum is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for momentum investors than value investors.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Trinity Industries has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.