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Why Is Trinity Industries (TRN) Down 2.8% Since Last Earnings Report?

It has been about a month since the last earnings report for Trinity Industries (TRN). Shares have lost about 2.8% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Earnings Miss at Trinity in Q1

Quarterly earnings of 7 cents per share missed the Zacks Consensus Estimate of 32 cents but improved more than 100% year over year. Total revenues of $641.7 million outpaced the Zacks Consensus Estimate of $580 million and grew 35.7% year over year. The top line was aided by a higher volume of external deliveries and improved pricing in the Rail Products Group.

The Railcar Leasing and Management Services Group generated revenues of $203.5 million, up 11.1% year over year. Segmental revenues were boosted by higher utilization and improved lease rates.

Revenues in the Rail Products Group (before eliminations) totaled $637.8 million, up 63.1% year over year. The uptick was backed by higher delivery volumes and favorable pricing, partially offset by the mix of railcars sold. Segmental operating profit was $25.3 million compared with $0.8 million in the year-ago period. The operating profit margin grew to 4% from 0.2% in the year-ago reported quarter.

Trinity exited the first quarter with cash and cash equivalents of $81.9 million compared with $79.6 million at December 2022-end. Debt totaled $5,707.6 million as of Dec 31, 2022, compared with $5,607.6 million at the end of December 2022.

During the reported quarter, TRN generated $99.4 million of net cash from operating activities. Adjusted free cash flow (after investments and dividends) was $36.2 million.

Trinity rewarded its shareholders with dividends worth $21.1 million.

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How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month.

VGM Scores

Currently, Trinity Industries has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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 #5 (Strong Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Trinity Industries is part of the Zacks Transportation - Equipment and Leasing industry. Over the past month, Gatx (GATX), a stock from the same industry, has gained 7%. The company reported its results for the quarter ended March 2023 more than a month ago.

Gatx reported revenues of $338.9 million in the last reported quarter, representing a year-over-year change of +7%. EPS of $2.20 for the same period compares with $2.34 a year ago.

Gatx is expected to post earnings of $1.47 per share for the current quarter, representing a year-over-year change of +37.4%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Gatx. Also, the stock has a VGM Score of D.

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