It has been about a month since the last earnings report for Trinity Industries (TRN). Shares have lost about 8.1% 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.
Trinity Beats Q4 Earnings Estimates
Trinity’s fourth-quarter 2022 earnings of 44 cents per share outpaced the Zacks Consensus Estimate by a penny and improved more than 100% year over year. The bottom line was backed by improved operating results and the impact of lower diluted weighted average shares outstanding.
Total revenues of $591.2 million fell short of the Zacks Consensus Estimate of $881.9 million but grew 25.2% 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 $197.4 million, up 8.9% year over year. Segmental revenues were boosted by higher utilization, increased lease fleet size and improved renewal rates.
Revenues in the Rail Products Group (before eliminations) totaled $655.7 million, up 63.1% year over year. Higher delivery volumes, favorable pricing and product mix boosted segmental revenues. Segmental operating profit was $18.6 million compared with $13.4 million in the year-ago period.
Trinity exited the fourth quarter with cash and cash equivalents of $79.6 million compared with $58.5 million at the end of September 2022. Debt totaled $5,607.6 million as of Dec 31, 2022, compared with $5,493.7 million at the end of September 2022.
During the fourth quarter, Trinity repurchased almost $12 million of shares in the open market, under its authorized share repurchase program. TRN’s board of directors terminated this share repurchase program effective Dec 8, 2022, and the remaining authorization of $21 million under this program expired unused.
In December 2022, TRN’s board of directors approved a new share repurchase program effective Dec 9, 2022, with no expiration. The new share repurchase program allows TRN to repurchase up to $250 million of its common stock.
In December 2022, TRN’s board of directors also declared a dividend hike of almost 13%, thereby raising the quarterly cash dividend from 23 cents per share to 26 cents per share.
During 2022, Trinity rewarded its shareholders with dividends worth $76.9 million and repurchased shares worth $51.8 million.
For 2023, Trinity anticipates earnings in the range of $1.50 - $1.70 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -13.51% due to these changes.
At this time, Trinity Industries has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise 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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