Results: Triton International Limited Exceeded Expectations And The Consensus Has Updated Its Estimates
Triton International Limited (NYSE:TRTN) just released its latest second-quarter results and things are looking bullish. Triton International beat earnings, with revenues hitting US$321m, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 10%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
View our latest analysis for Triton International
Taking into account the latest results, the current consensus, from the four analysts covering Triton International, is for revenues of US$1.30b in 2020, which would reflect a measurable 2.8% reduction in Triton International's sales over the past 12 months. Statutory earnings per share are forecast to dip 6.3% to US$3.81 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.24b and earnings per share (EPS) of US$3.31 in 2020. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a nice increase in earnings per share in particular.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 15% to US$37.50per share. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Triton International analyst has a price target of US$41.00 per share, while the most pessimistic values it at US$32.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Triton International is an easy business to forecast or the the analysts are all using similar assumptions.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with the forecast 2.8% revenue decline a notable change from historical growth of 17% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.0% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Triton International is expected to lag the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Triton International's earnings potential next year. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on Triton International. Long-term earnings power is much more important than next year's profits. We have forecasts for Triton International going out to 2022, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Triton International (1 is potentially serious) you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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