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Trinity Industries (TRN) Up 3.9% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Trinity Industries (TRN). Shares have added about 3.9% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Trinity Industries due for a pullback? 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 catalysts.

Earnings Miss at Trinity in Q2

Trinity Industries’ earnings of 2 cents per share (excluding $1.78 from non-recurring items) missed the Zacks Consensus Estimate of 8 cents. Moreover, the bottom line plunged 93.1% year over year.

Total revenues of $509.2 million surpassed the Zacks Consensus Estimate of $474 million. However, the top line dipped 30.8% year over year due to lower deliveries in the Rail Products Group and fewer railcars sold.

The Railcar Leasing and Management Services Group generated revenues of $192.8 million, down 30.4% year over year. The downside was primarily caused by lower fleet utilization. Segmental operating profit amounted to $82.9 million, down 20.9% from the year-ago quarter’s figure due to lower volume of railcars sold.  

Revenues in the Rail Products Group (before eliminations) totaled $405.6 million, down 43.9% from the prior-year quarter’s number. Segmental operating profit was $7.9 million compared with $66.3 million a year ago. The decline in revenues and operating profit was caused by low railcar deliveries and reduced operational efficiency.  

Revenues at the All Other Group (primarily includes results of highway products business) were $69.3 million, 2.1% up year over year buoyed by higher demand at highway products business. Segmental operating profit came in at $7.3 million, compared with $7.9 million in the second quarter of 2019.

Liquidity

The company exited the quarter with cash and cash equivalents of $157 million compared with $166.2 million at 2019-end. Meanwhile, debt totaled $4,825.4 million as of Jun 30 compared with $4,881.9 million at the end of 2019.


 

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions. The consensus estimate has shifted 12.5% due to these changes.

VGM Scores

At this time, Trinity Industries has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

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

Outlook

Trinity Industries has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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