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Triton (TRTN) to Post Q4 Earnings: Disappointment in Store?

Zacks Equity Research

Triton International Limited TRTN is slated to release fourth-quarter 2018 results on Feb 14, before market opens.

In the third quarter, the company delivered impressive results, with earnings and revenues beating the Zacks Consensus Estimate. Also, the top line improved year over year on the back of strong operating lease revenues.

However, the situation is anything but encouraging ahead of its fourth-quarter release. The Zacks Consensus Estimate for fourth-quarter earnings has been revised 4.2% downward in the past 90 days, indicating negativity surrounding the stock.

Moreover, shares of the company have declined 6.7% in the October-December period.

Factors Likely at Play

As in the past few quarters, finance lease revenues are expected to decline in the fourth quarter as well. Decline in finance lease revenues are expected to dent top-line growth in the to-be-reported quarter.

Furthermore, the fourth quarter is a sluggish season for dry containers. Consequently, market metrics such as utilization, box prices, average lease rate etc. are expected to decline slightly. This might have an adverse impact on the company’s top-line results in the to-be-reported quarter.

Moreover, trade war tensions between the United States and China might hurt quarterly results by impacting container trading volumes adversely. Brexit-related uncertainty may also dent Triton’s results in the quarter under discussion.

Additionally, the company’s high-debt levels raise concerns. Triton is a highly leveraged company, by the fact that the ratio of its long-term debt-to-equity (expressed as a percentage) compares unfavorably with the industry’s figure.

Nevertheless, strong operating lease revenues are expected to boost the top line in the final quarter, as it has done in the past few quarters. Lower tax rates as a result of the current tax law are anticipated to drive the bottom line in the to-be-reported quarter.

Triton International Limited Price and EPS Surprise

 

Triton International Limited Price and EPS Surprise | Triton International Limited Quote

Earning Whispers

Our proven model does not indicate earnings beat for Triton this quarter. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, that is not the case here as elaborated below.

Zacks Rank: Triton carries a Zacks Rank #4 (Sell).

Earnings ESP: Triton has an Earnings ESP of -2.22%. The Most Accurate Estimate is at $1.10 per share, lower than the Zacks Consensus Estimate of $1.13. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

We caution against Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Investors interested in the Zacks Transportation sector may check the following companies that have the right combination of elements to beat estimates in their upcoming releases:

Copa Holdings, S.A. CPA has an Earnings ESP of +8.41% and a Zacks Rank #2.  The company will release fourth-quarter 2018 results on Feb 13. You can see the complete list of today’s Zacks #1 Rank stocks here.

LATAM Airlines Group S.A. LTM has an Earnings ESP of +2.90% and a Zacks Rank #2. The company will release fourth-quarter 2018 results on Mar 12.

Aircastle Limited AYR has an Earnings ESP of +2.76% and a Zacks Rank #3.  The company will release fourth-quarter 2018 results on Feb 12.

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