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Trinity (TRN) Stock Down Since Q3 Earnings Release: Here's Why

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Trinity Industries’ (TRN - Free Report) third-quarter 2020 earnings (excluding 4 cents from non-recurring items) of 17 cents per share massively surpassed the Zacks Consensus Estimate of 5 cents. Total revenues of $459.4 million also outperformed the Zacks Consensus Estimate of $443.8 million.

Despite better-than-expected results, shares of the company dipped 2.4% since the earnings release on Oct 21. This can be attributed to significant declines in the top and the bottom lines amid the coronavirus-induced global economic slowdown.

While the bottom line plunged 56.4% year over year, the top line fell 43.5%. Lower deliveries in the Rail Products Group and fewer railcars sold hurt revenues in the quarter.

Trinity Industries, Inc. Price, Consensus and EPS Surprise

Trinity Industries, Inc. Price, Consensus and EPS Surprise

Trinity Industries, Inc. price-consensus-eps-surprise-chart | Trinity Industries, Inc. Quote

Results in Detail

Since Nov 1, 2018, Trinity primarily reports via three segments — Railcar Leasing and Management Services Group, Rail Products Group and All Other Group.

The Railcar Leasing and Management Services Group generated revenues of $183.9 million, down 43.6% year over year. The downside was caused by lower fleet utilization and lower lease rates on renewals. Segmental operating profit dropped 22.5% to $89.7 million due to lower volume of railcars sold.  

Revenues in the Rail Products Group (before eliminations) totaled $381.2 million, down 48.1% from the prior-year quarter’s number. Segmental operating profit was $3.2 million compared with $65.4 million a year ago. The decline in revenues and operating profit was caused by low railcar deliveries and lower pricing.

Revenues at the All Other Group (primarily includes results of highway products business) were $62.6 million, down 10.9% year over year due to decreased demand for highway products. Segmental operating profit came in at $7.3 million, compared with $3.9 million in the third quarter of 2019. Lower costs drove operating profits at this segment.

In the first nine months of 2020, Trinity rewarded shareholders with $193 million through dividends and share repurchases. Additionally, in October, the company’s board approved a new buyback program, authorizing it to repurchase up to $250 million shares. The program, effective Oct 23, 2020, will run through Dec 31, 2021.

The Zacks Rank #2 (Buy) company exited the third quarter with cash and cash equivalents of $120.8 million compared with $166.2 million at 2019-end. Meanwhile, debt totaled $4,935.1 million as of Sep 30, 2020, compared with $4,881.9 million at the end of 2019. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Sectorial Snapshot

Let’s take a look at some of the other recently released earnings reports from companies within the Zacks Transportation sector.

Kansas City Southern (KSU - Free Report) , carrying a Zacks Rank #3 (Hold), reported third-quarter 2020 earnings (excluding 5 cents from non-recurring items) of $1.96 per share, beating the Zacks Consensus Estimate of $1.88. Meanwhile, quarterly revenues of $659.6 million lagged the Zacks Consensus Estimate of $662.4 million.

JB Hunt Transport Services Inc. (JBHT - Free Report) , carrying a Zacks Rank of 3, reported third-quarter 2020 earnings of $1.18 per share, falling short of the Zacks Consensus Estimate of $1.26. Total operating revenues of $2,472.5 million beat the consensus mark of $2,345.2 million.

United Airlines Holdings Inc. (UAL - Free Report) , carrying a Zacks Rank #4 (Sell), incurred a loss (excluding $1.83 from non-recurring items) of $8.16 per share in the third quarter of 2020, narrower than the Zacks Consensus Estimate of a loss of $7.63. Moreover, operating revenues of $2,489 million lagged the Zacks Consensus Estimate of $2,570.1 million.

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