Triton's (TRTN) Q4 Earnings Miss Estimates, Decline Y/Y

Triton International Limited’s (NYSE:TRTN) fourth-quarter 2019 earnings per share of $1.07 missed the Zacks Consensus Estimate of $1.14. The bottom line also decreased 14.4% year over year. Results were hurt by low demand for new containers due to weak trade growth as a result of the U.S.-China trade tensions. Further, quarterly revenues of $331.18 million declined 6.8% year over year due to 7.3% fall in revenues from operating leases.

Despite the massive earnings miss and the year-over-year drop in the bottom line, shares of the company were up 1.7% at the close of business on Feb 14 owing to management’s positive comments on market conditions. With signs of improving market conditions following the phase one trade deal, the company expects trade volumes to expand.

Coming back to the earnings report, Equipment trading revenues of $17.16 million plunged 34.7% from the year-ago quarter’s figure. Trading margin came in at $2.27 million compared with $6.13 million a year ago.

The company generated a return on equity of 14.6% in the reported quarter compared with 17.7% in the year-ago period. Total operating expenses inched up slightly to $175.81 million.

Additionally, Triton exited the fourth quarter with average utilization of 95.8%, down 90 basis points sequentially.

The company bought back 6.9 million shares during 2019. In fact, it purchased approximately 8.9 million shares for $281.6 million as of Feb 7, 2020 under the share buyback plan cleared in August 2018. Moreover, the board announced a quarterly cash dividend of 52 cents per share, payable Mar 27, 2020 to its shareholders of record as of Mar 13.

The company’s board also approved a cash dividend of 53.125 cents per share on its 8.50% Series A Preferred Shares, a cash dividend of 50 cents on its 8% Series B Preferred Shares, a cash dividend amounting to 46 cents on its 7.375% Series C Preferred Shares and an initial dividend of 24.349 cents on its 6.875% Series D Preferred Shares. Each dividend is payable to shareholders on Mar 16, of record as of Mar 9.

Q1 Outlook

The company’s first-quarter 2020 performance is likely to be affected by seasonal sluggishness and higher selling, general and administrative expenses. Reduced lease rates are also expected to hurt results in the period. Consequently, adjusted net income per share is anticipated to decline sequentially in the quarter.

Zacks Rank & Key Picks

Triton carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader Transportation sector are GATX Corporation (NYSE:GATX) , Azul S.A. (NYSE:AZUL) and Delta Air Lines, Inc. (NYSE:DAL) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

GATX has an impressive earnings history, having outperformed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 21%. Meanwhile, shares of Azul and Delta have rallied more than 34% and 15%, respectively, in a year’s time.

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