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Why Is Triton (TRTN) Down 5.2% Since Last Earnings Report?

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It has been about a month since the last earnings report for Triton International (TRTN - Free Report) . Shares have lost about 5.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Triton due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Earnings Beat at Triton International in Q1

Triton International’s first-quarter 2019 adjusted earnings per share of $1.19 surpassed the Zacks Consensus Estimate of $1.06 and also improved 20.2% year over year. High utilization and strong used container sale prices aided results.

Quarterly revenues of $341 million fell short of the Zacks Consensus Estimate of $355 million. However, the top line was up 8.2% year over year, primarily owing to 6.5% growth in revenues from operating leases.

The company generated a return on equity of 17.2% in the reported quarter as compared to 15.4% a year ago. However, total operating expenses increased 5.3% to $169.46 million.

Equipment trading revenues of $17.83 million surged more than 33.3% from the year-ago quarter. Trading margin in the quarter under review came in at approximately $3.59 million compared with $3 million in the year-ago period.

The company exited the firstquarter with utilization of 97.6% although container pick-up volumes were slow during the quarter due to seasonal sluggishness. Moreover, as of Apr 22, 2019, the company purchased 5.1 million shares under the share buyback plan cleared last August. Additionally, the company’s board has announced a new buyback program worth $200 million.

Outlook

With trade growth expected to be moderate throughout the year and leasing activity anticipated to ramp up  into the second quarter, the company expects adjusted net income per share for the second quarter of 2019 to decrease slightly on a sequential basis. For the rest of the year, adjusted income per share is projected to increase. Leasing revenues are estimated to suffer a negative impact in the near term on account of certain initiatives taken by the company for long-term growth.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, Triton has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Triton has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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