Trinity Industries (TRN) Q1 Earnings: A Beat In The Offing?

Trinity Industries, Inc. (NYSE:TRN) is scheduled to report first-quarter 2018 results on Apr 25, after market close.

In the fourth quarter of 2017, the company delivered a positive earnings surprise of 2.4%. Trinity Industries also surpassed the Zacks Consensus Estimate for earnings in each of the trailing four quarters, with an average beat of approximately 12.6%.

Notably, the stock’s impressive earnings history is well reflected in its price performance. In a year’s time, Trinity Industries has rallied 18.6% compared with the Zacks Equipment and Leasing industry’s gain of 3.6%.

Factors Likely at Play

Trinity Industries’ first-quarter results are anticipated to benefit from an impressive performance at its Railcar Leasing and Management Services Group unit. Growth in the lease fleet is expected to boost the segment. Also, the company’s cost-effective manufacturing process should lead to bottom-line growth in the soon-to-be-reported quarter.

Additionally, the company’s efforts to reward shareholders through dividends and share buybacks are encouraging. An update on the issue is expected on first-quarter conference call. Trinity might also increase its dividend payout, particularly with the advent of the new tax law, which is anticipated to aid the company significantly. An update on its plans to spin off the infrastructure-related business is expected on the same conference call. The spin-off is likely to be completed by year end.

The Rail Group segment, which recorded discouraging results in the fourth quarter, is expected to continue with its poor run in the first quarter as well. Also, the Inland Barge Group might come up with a below-par performance mainly due to lower barge deliveries.

What Does the Zacks Model Unveil?

Our proven model shows that Trinity Industries is likely to beat on earnings in the first quarter. This is because the stock has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase its odds of an earnings surprise.

Zacks ESP: Trinity Industries has an Earnings ESP of +11.61% as the Most Accurate estimate of 25 cents is 3 cents higher than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Trinity Industries carries a Zacks Rank #3, which when combined with a positive ESP makes us confident of an earnings beat.

Conversely, we caution against stocks with a Zacks Ranks #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Investors interested in the broader Zacks Transportation sector may also check out the following companies with the right combination of elements to beat estimates in the next releases:

Hawaiian Holdings, Inc. (NASDAQ:HA) has an Earnings ESP of +2.57% and a Zacks Rank #3. The company will release first-quarter 2018 results on Apr 24. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Spirit Airlines, Inc. (NYSE:SAVE) has an Earnings ESP of +2.46% and a Zacks Rank of 3. The company will release first-quarter 2018 results on Apr 26.

Copa Holdings, S.A. (NYSE:CPA) has an Earnings ESP of +0.75% and a Zacks Rank #3. The company is scheduled to release first-quarter results on May 9.

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