Trinity Industries (TRN) Up 3.5% Since Last Earnings Report: Can It Continue?

A month has passed since Trinity Industries’ (TRN) last earnings report. Shares have risen about 3.5% in that time, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Trinity Industries headed for a decline? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the company’s most recent earnings report in order to better understand the important catalysts.

Trinity outperformed in Q1

Trinity’s first-quarter 2024 earnings of 33 cents per share surpassed the Zacks Consensus Estimate of 26 cents and improved more than 100% year-over-year.

Total revenues of $809.6 million increased 26.2% year-over-year. The financial result was influenced by higher external deliveries in the Rail Products Group, better leasing rates and a higher volume of external repairs in the Leasing Group.

Operating profit of $115.2 million increased 66.9% year over year. This growth was supported by higher external deliveries in the Rail Products Group, improved leasing rates and higher volume of external repairs in the Leasing Group, which was partially offset by lower sales volume of the leasing portfolio.

The railcar leasing and management services group generated revenue of $285.2 million, up 22.4% year-over-year. The increase in segment revenues was driven by a higher volume of repairs performed for external entities, higher leasing rates and net increases in the leasing fleet. Segment operating profit was $100.3 million, an increase of 18.5%, driven by higher leasing rates and higher exterior repair volume, partially offset by lower leasing portfolio sales volume.

Revenues at the Rail Products Group were $667.4 million, up 13.5% year-on-year on higher deliveries. Segment operating profit was $43.8 million compared to $24.1 million in the same period last year. This increase was due to higher deliveries and improved operational and labor efficiency. Operating profit margin increased to 6.6% from 4.1% in the same quarter last year.

Trinity ended the first quarter with cash and cash equivalents of $118.8 million, compared to $105.7 million at the end of the fourth quarter. As of March 31, 2024, debt was $5,867 million compared to $5,754.2 million at the end of the previous quarter.

In the first quarter of 2024, TRN generated $56.5 million of net cash from operations. Adjusted free cash flow was $11.7 million. Trinity rewarded its shareholders with $23 million during the reported quarter.

Trinity raised its 2024 earnings per share guidance to a range of $1.35-$1.55 (excluding non-core items) from $1.30-$1.50 previously set. Forecasts of higher profits make us optimistic about stocks.

How have estimates changed since then?

Analysts have been quiet over the past two months as none of them have issued any earnings estimate revisions.

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