Trinity Industries (TRN) Down 14.8% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Trinity Industries (TRN). Shares have lost about 14.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Trinity Industries 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 catalysts.

Earnings Miss at Trinity in Q1

Trinity’s adjusted earnings of 3 cents per share missed the Zacks Consensus Estimate of 16 cents. Results were hurt by supply chain disruptions and labor shortages.

Total revenues of $473 million also fell short of the Zacks Consensus Estimate of $603 million. However, the top line increased year over year due to higher external deliveries in the Rail Products Group.

The Railcar Leasing and Management Services Group (before eliminations) generated revenues of $183.1 million, nearly flat year over year. Segmental revenues were hurt by lower average lease rates and reduced lease fleet size.

Revenues in the Rail Products Group (before eliminations) totaled $391.1 million, up 50% year over year. Higher delivery volumes boosted segmental revenues. Segmental operating profit was $0.8 million compared with a loss of $8.8 million in the year-ago period.

The All Other Group (primarily includes results of highway products business) did not generate revenues in the fourth quarter.

During the first quarter, Trinity rewarded its shareholders with $19.1 million in dividends. The company did not repurchase shares in the quarter. Free cash flow generated during the period was $48 million.

Trinity exited the March quarter with cash and cash equivalents of $143.2 million compared with $167.3 million at the end of December 2021.

Debt totaled $5,227.5 million as of Mar 31, 2022, compared with $5,170.6 million at the end of 2021.

2022 Outlook

Trinity expects industry deliveries of 40,000-50,000 railcars in 2022. Net investment in lease fleet is estimated to be $450-$550 million. The company anticipates manufacturing capital expenditures of $35-$45 million in 2022. Earnings per share are forecast to be 85 cents-$1.05 in 2022.

 

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -41.3% due to these changes.

VGM Scores

At this time, Trinity Industries has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, 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 D. 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, Trinity Industries has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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