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Why Investors Should Avoid Trinity Industries (TRN) Stock Now
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Trinity Industries, Inc. (TRN - Free Report) is currently mired in multiple headwinds, which we believe, have made it an unimpressive investment option.
Let’s delve deeper.
Southward Earnings Estimate Revisions: The Zacks Consensus Estimate for earnings for the current quarter and current year has been revised 13.5% and 13% downward, over the past 60 days. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
An Underperformer: Trinity stock has declined 25.5% in a year’s time against the 0.6% rise of its industry’s.
Image Source: Zacks Investment Research
Weak Zacks Rank: Trinity currently carries a Zacks Rank #5 (Strong Sell). Our research shows that stocks with a Zacks Rank #4 (Sell) or #5 does not offer attractive investment opportunities.
Bearish Industry Rank: The industry to which TRN belongs, currently has a Zacks Industry Rank of 151 (of 250 plus groups). Such an unfavorable rank places TRN in the bottom 40% of the Zacks industries.
Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to. A mediocre stock within a strong group is likely to outclass a robust stock in a weak group. Therefore, reckoning the industry’s performance becomes imperative.
Other Headwinds: Trinity exited the December quarter with the current ratio (a measure of liquidity) of 0.89, lower than the September quarter's reading of 1.80. Decreasing current ratio is alarming. Moreover, a current ratio of less than 1 implies that the company doesn't have enough liquid assets to cover its short-term liabilities.
Trinity’s operations are being hurt by supply chain-disruptions and labor shortages. Notably, labor and supply-chain challenges faced by Trinity's Rail Products Group impacted deliveries and margins of the segment in fourth-quarter 2022.
Stocks to Consider
Some better-ranked stocks in the Zacks Transportation sector are Copa Holdings (CPA - Free Report) and GATX Corporation (GATX - Free Report) ).
Copa Holdings currently sports a Zacks Rank #1 (Strong Buy). CPA's focus on its cargo segment is very encouraging. In fourth-quarter 2022, cargo and mail revenues jumped 69% to $27.09 million, owing to higher cargo volumes and yields. You can see the complete list of today’s Zacks #1 Rank stocks here.
For first-quarter and full-year 2023, CPA’s earnings are expected to register 302.9% and 40.6% growth, respectively, on a year-over-year basis.
GATX Corporation carries a Zacks Rank #2 (Buy) at present. The gradual improvement in the North American railcar leasing market is a huge positive for GATX. Management expects recovery in the North American railcar leasing market to continue in 2023.
For full-year 2023, GATX’s earnings are expected to register 10.5% growth on a year-over-year basis.
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Why Investors Should Avoid Trinity Industries (TRN) Stock Now
Trinity Industries, Inc. (TRN - Free Report) is currently mired in multiple headwinds, which we believe, have made it an unimpressive investment option.
Let’s delve deeper.
Southward Earnings Estimate Revisions: The Zacks Consensus Estimate for earnings for the current quarter and current year has been revised 13.5% and 13% downward, over the past 60 days. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
An Underperformer: Trinity stock has declined 25.5% in a year’s time against the 0.6% rise of its industry’s.
Image Source: Zacks Investment Research
Weak Zacks Rank: Trinity currently carries a Zacks Rank #5 (Strong Sell). Our research shows that stocks with a Zacks Rank #4 (Sell) or #5 does not offer attractive investment opportunities.
Bearish Industry Rank: The industry to which TRN belongs, currently has a Zacks Industry Rank of 151 (of 250 plus groups). Such an unfavorable rank places TRN in the bottom 40% of the Zacks industries.
Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to. A mediocre stock within a strong group is likely to outclass a robust stock in a weak group. Therefore, reckoning the industry’s performance becomes imperative.
Other Headwinds: Trinity exited the December quarter with the current ratio (a measure of liquidity) of 0.89, lower than the September quarter's reading of 1.80. Decreasing current ratio is alarming. Moreover, a current ratio of less than 1 implies that the company doesn't have enough liquid assets to cover its short-term liabilities.
Trinity’s operations are being hurt by supply chain-disruptions and labor shortages. Notably, labor and supply-chain challenges faced by Trinity's Rail Products Group impacted deliveries and margins of the segment in fourth-quarter 2022.
Stocks to Consider
Some better-ranked stocks in the Zacks Transportation sector are Copa Holdings (CPA - Free Report) and GATX Corporation (GATX - Free Report) ).
Copa Holdings currently sports a Zacks Rank #1 (Strong Buy). CPA's focus on its cargo segment is very encouraging. In fourth-quarter 2022, cargo and mail revenues jumped 69% to $27.09 million, owing to higher cargo volumes and yields. You can see the complete list of today’s Zacks #1 Rank stocks here.
For first-quarter and full-year 2023, CPA’s earnings are expected to register 302.9% and 40.6% growth, respectively, on a year-over-year basis.
GATX Corporation carries a Zacks Rank #2 (Buy) at present. The gradual improvement in the North American railcar leasing market is a huge positive for GATX. Management expects recovery in the North American railcar leasing market to continue in 2023.
For full-year 2023, GATX’s earnings are expected to register 10.5% growth on a year-over-year basis.