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Why Is Triton (TRTN) Down 7.2% Since Last Earnings Report?

Zacks Equity Research

A month has gone by since the last earnings report for Triton International (TRTN). Shares have lost about 7.2% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Earnings Beat at Triton International in Q2

Triton International's second-quarter 2019 earnings per share (excluding 3 cents from non-recurring items) of $1.15 outpaced the Zacks Consensus Estimate by 5 cents and also improved 4.6% year over year. Results were aided by the company’s strong operating performance.

Quarterly revenues totaled $338.6 million, which lagged the Zacks Consensus Estimate of $354.8 million. However, the top line improved 2.7% year over year primarily owing to more than 100% increase in revenues from finance leases.

Equipment trading revenues of $23.2 million increased more than 28% from the year-ago quarter. Trading margin in the quarter under review came in at approximately $4.5 million compared with $4 million in the year-ago period.

The company generated a return on equity of 16.2% in the reported quarter compared with 16.4% a year ago. However, total operating expenses increased 5.5% to $174 million.

These apart, Triton exited the second quarter with average utilization of 97.2%, down 40 basis points sequentially. Container pick-up volumes were slow during the quarter mainly due to the trade dispute between the United States and China.

Moreover, the company bought back 2.3 million shares during the reported quarter. In fact, Triton purchased 7.1 million shares as of Jul 19, 2019, under the share buyback plan cleared last August. Additionally, the company’s board announced a quarterly cash dividend of 52 cents per share. The amount is payable Sep 26 to its shareholders of record as of Sep 5.

Outlook

The company expects leasing activity to improve in the third quarter, even though the levels will be below those witnessed in peak seasons. Investments in new containers are anticipated to be limited throughout the current year.

Triton’s third-quarter adjusted EPS is anticipated to remain steady when compared with that in second-quarter 2019. EPS levels in the fourth quarter is likely to be dependent on the level of demand growth in the latter half 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.

VGM Scores

Currently, Triton has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile 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

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



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