Dividends Aid Trinity (TRN) Amid Labor & Supply-Chain Woes
Trinity Industries, Inc. (TRN) is benefiting from shareholder-friendly initiatives, higher volumes of external deliveries and improved pricing and contributions from acquisitions. However, the company continues to grapple with supply-chain disruptions and labor shortages.
Let’s delve deeper to see why investors should retain the stock.
Trinity has been consistently making efforts to reward its shareholders through dividends and share buybacks, which are encouraging. On Dec 6, 2023, TRN’s board of directors announced a dividend hike of almost 8%, thereby raising its quarterly cash dividend from 26 cents per share to 28 cents. The raised dividend, reflecting Trinity’s 239th consecutively paid dividend, will be paid out on Jan 31, 2024, to all its shareholders of record as of Jan 12, 2024. The move reflects TRN’s intention to utilize free cash to enhance its shareholders’ returns.
During the first nine months of 2023, TRN rewarded its shareholders with $64.7 million in dividend payments (did not repurchase any shares during the said time frame). The company also rewarded its shareholders with $76.9 million in dividends and $51.8 million in share repurchases during 2022. During 2021, Trinity also rewarded its shareholders with $88.5 million in dividends and $833.4 million in share repurchases. Such initiatives boost investor confidence and positively impact the company’s bottom line.
Notably, shares of TRN have gained 19.7% over the past six months outperforming the industry’s increase of 12.5%.
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Higher volumes of external deliveries and improved pricing are driving revenues at the Rail Products Group. Segmental revenues increased 14.2% year over year in the third quarter owing to higher delivery volumes and a favorable mix of railcars sold. The surge aligned with our estimate for the reported quarter.
On the flip side,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 have been impacting deliveries and margins of the segment lately. Due to the headwinds, management now expects 2023 earnings per share in the range of $1.2-$1.35 (prior view: $1.35-$1.45 per share).
Zacks Rank and Stocks to Consider
Currently, Trinity carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Zacks Transportationsector are Westinghouse Air Brake Technologies Corporation, operating as Wabtec Corporation WAB and SkyWest, Inc. SKYW. Each stock presently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Wabtec has an expected earnings growth rate of 22.02% for the current year. WAB delivered a trailing four-quarter earnings surprise of 7.11%, on average.
The Zacks Consensus Estimate for WAB’s current-year earnings has improved 5.1% over the past 90 days. Shares of WAB have gained 21.8% year to date.
SkyWest's fleet-modernization efforts are commendable. The Zacks Consensus Estimate for SKYW’s current-year earnings has improved 31.5% over the past 90 days. Shares of SKYW have surged 202.1% year to date.
SKYW delivered a trailing four-quarter earnings surprise of 32.57%, on average.
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