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Trinity (TRN) Gains 13% in a Year: What's Behind the Rally?

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Shares of Trinity Industries, Inc. (TRN - Free Report) have fared well in a year’s time. The stock has gained 12.9% compared with the industry’s 7.3% growth.

One-Year Price Performance

 

Factors Boosting the Stock

Trinity has an impressive surprise history. It surpassed earnings estimates in each of the trailing four quarters, the average being 24.9%.

We expect the company to perform well in the third quarter of 2018 as well. The company gave a bullish presentation at its Investor Day on Oct 4. At the event, the company stated that it received orders for 7,700 railcars and delivered 4,000 during the July-September period. In the to-be-reported quarter, railcar lease fleet utilization is anticipated to improve to 97.6% from 97.1% at the end of the second quarter.

The scenario pertaining to railcar deliveries is expected to improve further in 2019. The metric is anticipated to rise between 10% and 15% on a year-over-year basis to 20,500-21,000. The positivity surrounding this Zacks Rank #1 (Strong Buy) stock can be gauged from the fact that the Zacks Consensus Estimate for third-quarter earnings has been revised 22.8% upward over the past 90 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

We are also impressed by Trinity’s efforts to reward its shareholders through dividends and buybacks. At the Investor Day, the company said that it bought back shares worth $50 million during the third quarter, with $350 million left under its current authorization. The company also possesses an impressive dividend payment history. In May 2018, Trinity raised quarterly dividend by 18% to 13 cents.

Trinity expects to complete the spin-off of its infrastructure-related businesses — Arcosa — on Nov 1, 2018. The separation should enable Trinity to focus on its core area of strength. Additionally, the company has a Momentum Score of A, which reflects its short-term attractiveness.

Other Stocks to Consider

Investors interested in the broader Transportation Sector may also consider stocks like ArcBest Corporation (ARCB - Free Report) , FreightCar America (RAIL - Free Report) and Diana Shipping Inc.  (DSX - Free Report) , each sporting a Zacks Rank of 1.

Shares of ArcBest, FreightCar America and Diana Shipping have gained 29.8%, 25.2% and 16.8%, respectively, in the past six months.

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