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Transport Equipment & Leasing Stock Outlook: Bright Near Term
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The Zacks Transportation - Equipment and Leasing industry consists of companies offering equipment financing, leasing and supply chain management services. The industry includes aircraft, railcar and intermodal container lessors. Some of these companies even provide transportation solutions such as vehicles, drivers, management and administrative services. Most industry participants offer fleet management solutions.
Prominent industry players include global railcar lessor GATX Corporation (GATX - Free Report) , integrated logistics and transportation solutions leader Ryder System (R - Free Report) and intermodal container lessor Triton International Limited .
Let’s take a look at the industry’s three major themes:
The transport equipment and leasing industry is highly reliant on the domestic economy. Given a stable economy with healthy consumer spending and credit conditions as well as a tight labor market, demand is likely to remain firm overall for the industry. Leasing continues to be one of the most common financing types for businesses purchasing capital equipment.
The Fed’s “patient” approach to interest rate hikes is another boon to the industry. The cessation on interest rate hikes this year is likely to boost consumer spending (reducing cost of borrowing) in general and in turn will result in an uptick in lending and borrowing activities.
Although the U.S economy has been buoyant on the whole, a global slowdown in trade and the U.S.-China trade war has been affecting demand at several industry verticals since the second half of 2018. Pointers indicate a persistence of this situation through 2019.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Transportation - Equipment and Leasing industry, which is housed within the broader Transportation sector, currently carries a Zacks Industry Rank #98. This rank places it at the top 38% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of positive earnings outlook for the constituent companies in aggregate. The group’s current-year EPS estimate has increased 1.6% since last September.
In light of the positivity, we will present a few stocks that you may want to consider for your portfolio. But, before that, it’s worth taking a look at the industry’s shareholder returns and current valuation.
Industry Lags Sector & S&P 500
The Zacks Transportation - Equipment and Leasing industry has lagged both the broader Transportation sector and the Zacks S&P 500 composite over the past year.
Over this period, the industry has declined 5.7% versus the broader sector and the S&P 500 index’s gain of 3.3% and 10.8%, respectively.
One-Year Price Performance
Industry’s Current Valuation
On the basis of a forward P/E (F12) ratio, which is a commonly used multiple for valuing equipment and leasing stocks, the industry is currently trading at 11.2X compared with the S&P 500’s 17.25X. It is also lower than the sector’s P/E (F12) ratio of 13.85X.
Over the past five years, the industry has traded as high as 16.22X, as low as 8.63X and at the median of 13.48X, as the chart below shows.
Forward Price/Earnings (F12) Ratio
Forward Price/Earnings (F12) Ratio
Bottom Line
Despite concerns such as a global economic slowdown and U.S.-China trade tensions, factors such as low unemployment rates and healthy consumer spending should favor the near-term growth of the equipment and leasing industry. Fed’s pause on interest rate hikes this year adds to the optimism.
Below we present three stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) that are well positioned to capitalize on the positive aspects of the economy. You can see the complete list of today’s Zacks #1 Rank stocks here.
Herc Holdings Inc. (HRI - Free Report) provides equipment rental suppliers primarily in North America through its subsidiary Herc Rentals Inc. The company sports a Zacks Rank #1 and the Zacks Consensus Estimate for its current-year earnings has been revised 31.4% upward in the last 60 days. The stock has gained 58.8% so far this year against the industry’s 13.6% increase.
Price and Consensus: HRI
Fly Leasing Limited is a global aircraft lessor of modern, high-demand and fuel-efficient commercial jets. The Zacks Consensus Estimate for this Zacks Rank #1 company’s current-year earnings has moved 12.1% north in the last 60 days. The stock has rallied 38% on a year-to-date basis against the industry’s 13.6% rise.
Price and Consensus: FLY
Triton International Limited is a Zacks Rank #2 company offering acquisition, leasing, re-leasing and sale of intermodal containers. The Zacks Consensus Estimate for the company’s current-year earnings has moved 3.3% upward in the last 60 days. Shares of the company have appreciated 8.5% in a year’s time against the industry’s 5.7% decline.
Price and Consensus: TRTN
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Transport Equipment & Leasing Stock Outlook: Bright Near Term
The Zacks Transportation - Equipment and Leasing industry consists of companies offering equipment financing, leasing and supply chain management services. The industry includes aircraft, railcar and intermodal container lessors. Some of these companies even provide transportation solutions such as vehicles, drivers, management and administrative services. Most industry participants offer fleet management solutions.
Prominent industry players include global railcar lessor GATX Corporation (GATX - Free Report) , integrated logistics and transportation solutions leader Ryder System (R - Free Report) and intermodal container lessor Triton International Limited .
Let’s take a look at the industry’s three major themes:
The transport equipment and leasing industry is highly reliant on the domestic economy. Given a stable economy with healthy consumer spending and credit conditions as well as a tight labor market, demand is likely to remain firm overall for the industry. Leasing continues to be one of the most common financing types for businesses purchasing capital equipment.
The Fed’s “patient” approach to interest rate hikes is another boon to the industry. The cessation on interest rate hikes this year is likely to boost consumer spending (reducing cost of borrowing) in general and in turn will result in an uptick in lending and borrowing activities.
Although the U.S economy has been buoyant on the whole, a global slowdown in trade and the U.S.-China trade war has been affecting demand at several industry verticals since the second half of 2018. Pointers indicate a persistence of this situation through 2019.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Transportation - Equipment and Leasing industry, which is housed within the broader Transportation sector, currently carries a Zacks Industry Rank #98. This rank places it at the top 38% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of positive earnings outlook for the constituent companies in aggregate. The group’s current-year EPS estimate has increased 1.6% since last September.
In light of the positivity, we will present a few stocks that you may want to consider for your portfolio. But, before that, it’s worth taking a look at the industry’s shareholder returns and current valuation.
Industry Lags Sector & S&P 500
The Zacks Transportation - Equipment and Leasing industry has lagged both the broader Transportation sector and the Zacks S&P 500 composite over the past year.
Over this period, the industry has declined 5.7% versus the broader sector and the S&P 500 index’s gain of 3.3% and 10.8%, respectively.
One-Year Price Performance
Industry’s Current Valuation
On the basis of a forward P/E (F12) ratio, which is a commonly used multiple for valuing equipment and leasing stocks, the industry is currently trading at 11.2X compared with the S&P 500’s 17.25X. It is also lower than the sector’s P/E (F12) ratio of 13.85X.
Over the past five years, the industry has traded as high as 16.22X, as low as 8.63X and at the median of 13.48X, as the chart below shows.
Forward Price/Earnings (F12) Ratio
Forward Price/Earnings (F12) Ratio
Bottom Line
Despite concerns such as a global economic slowdown and U.S.-China trade tensions, factors such as low unemployment rates and healthy consumer spending should favor the near-term growth of the equipment and leasing industry. Fed’s pause on interest rate hikes this year adds to the optimism.
Below we present three stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) that are well positioned to capitalize on the positive aspects of the economy. You can see the complete list of today’s Zacks #1 Rank stocks here.
Herc Holdings Inc. (HRI - Free Report) provides equipment rental suppliers primarily in North America through its subsidiary Herc Rentals Inc. The company sports a Zacks Rank #1 and the Zacks Consensus Estimate for its current-year earnings has been revised 31.4% upward in the last 60 days. The stock has gained 58.8% so far this year against the industry’s 13.6% increase.
Price and Consensus: HRI
Fly Leasing Limited is a global aircraft lessor of modern, high-demand and fuel-efficient commercial jets. The Zacks Consensus Estimate for this Zacks Rank #1 company’s current-year earnings has moved 12.1% north in the last 60 days. The stock has rallied 38% on a year-to-date basis against the industry’s 13.6% rise.
Price and Consensus: FLY
Triton International Limited is a Zacks Rank #2 company offering acquisition, leasing, re-leasing and sale of intermodal containers. The Zacks Consensus Estimate for the company’s current-year earnings has moved 3.3% upward in the last 60 days. Shares of the company have appreciated 8.5% in a year’s time against the industry’s 5.7% decline.
Price and Consensus: TRTN
Is Your Investment Advisor Fumbling Your Financial Future?
See how you can more effectively safeguard your retirement with a new Special Report, “4 Warning Signs Your Investment Advisor Might Be Sabotaging Your Financial Future.”
Click to get it free >>