Taking Some Profits In Trinity Industries

seekingalpha09-08

About 10 months ago, I recommended Trinity Industries Inc., and the shares have since returned about 55%, outperforming the S&P 500's 30.25% gain.Despite strong financial results, including ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2465914541?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1338075683/image_1338075683.jpg","is_english":true,"pubTime":"2024-09-08 13:30","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2465914541","market":"us","top_or_hot":-1,"title":"Taking Some Profits In Trinity Industries","media":"seekingalpha","content":"<div>\n<p>About 10 months ago, I recommended Trinity Industries Inc., and the shares have since returned about 55%, outperforming the S&P 500's 30.25% gain.Despite strong financial results, including ...</p>\n\n<a href=\"https://seekingalpha.com/article/4719736-taking-some-profits-in-trinity-industries-trn-stock\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Taking Some Profits In Trinity Industries</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nTaking Some Profits In Trinity Industries\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-09-08 13:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4719736-taking-some-profits-in-trinity-industries-trn-stock><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>About 10 months ago, I recommended Trinity Industries Inc., and the shares have since returned about 55%, outperforming the S&P 500's 30.25% gain.Despite strong financial results, including ...</p>\n\n<a href=\"https://seekingalpha.com/article/4719736-taking-some-profits-in-trinity-industries-trn-stock\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"TRN","symbol_name":"Trinity Industries Inc","start_time":0,"source_url":"https://seekingalpha.com/article/4719736-taking-some-profits-in-trinity-industries-trn-stock","article_id":"2465914541","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1338075683/image_1338075683.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2465914541","pubTimestamp":1725773400,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":") respectively. On the back of this, the company raised the dividend payments by about 9%, though dividends per share is only up by about 7.7% on the back of dilution. Additionally, the most recent performance has exceeded the pre-pandemic period also, with revenue and net income up by 23% and 16.6% respectively as compared to the same per","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"TRN":"Trinity Industries Inc","BK4149":"建筑机械与重型卡车"},"translate_title":"在Trinity Industries获利了结","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"TRN":1,"US10Y.BOND":0.82,"US12M.BOND":0.82,"US2Y.BOND":0.82,"US30Y.BOND":0.82,"US3Y.BOND":0.82,"US5Y.BOND":0.82,"US6M.BOND":0.82,"US7Y.BOND":0.82,"US912797GL51.BOND":0.6,"US912797GW17.BOND":0.6,"US912797HE00.BOND":0.6},"content_text":"About 10 months ago, I recommended Trinity Industries Inc., and the shares have since returned about 55%, outperforming the S&P 500's 30.25% gain.Despite strong financial results, including significant revenue and net income growth, the company's increased debt and interest expenses raise concerns for future dividend growth.The dividend yield is now 3.6%, lower than the 10 Year Treasury Note's 3.7%, making the investment less compelling compared to last year.I’m selling my original capital to invest in Treasuries but letting my gains ride, as the investment is still reasonably valued but not a \"slam dunk.\".   jimfeng Readers didn’t ask for it, but I didn’t care. About 10 months ago, I told you that I was changing my tune on Trinity Industries, Inc., (NYSE:TRN) and actually buying. The shares have returned about 55% since then, against a gain of about 30.25% for the S&P 500. I continued to pepper the market a few months ago when I announced to the world that I was continuing to hold the shares in spite of the run-up in price, and since then, they’ve returned about 5.65% against a loss of 1.4% for the S&P 500. The company has published financial results since then, and the shares of an investment priced at $31 is a much more risky investment than the same shares priced at $20.65, so I thought I’d review the name again. I’ll decide whether to buy more, hold, or take profits by looking at those financial results and the valuation. According to some people who read my stuff, my writing can be “a bit extra.” For that reason, I see a need to give people a thesis statement near the beginning of each article. This allows them to extract the gist of my thinking without the need to read the entire piece. Thus are they saved from bragging, bad jokes, and proper spelling that has littered my prose over the years. You’re welcome. Anyway, after reviewing the state of affairs here, I’m going to sell my original capital here and invest it in Treasuries. I’ll let the gains I’ve made “ride” because I think there are still many positives to this investment. If the shares drop from current levels, I won’t be as emotionally stung because I can convince myself that at this point I’m “playing with the house’s money.” The one thing I won’t be doing is adding more capital here. The investment is just not as compelling as it was. So, if you’re just coming to this party, welcome. I would look for more profitable opportunities elsewhere if I were you. Financial Snapshot Relative to the same period a year ago, the financial results here have been very good in my view. Revenue, operating profits, and net income are up by 21%, 53%, and 265% (!) respectively. On the back of this, the company raised the dividend payments by about 9%, though dividends per share is only up by about 7.7% on the back of dilution. Additionally, the most recent performance has exceeded the pre-pandemic period also, with revenue and net income up by 23% and 16.6% respectively as compared to the same period in 2019. It’s hard to find perfection in the world, though, and these financial results are no exception. The capital structure has deteriorated somewhat, with debt up about 3.4% from the same period a year ago, and up a fairly massive 24% from 2019. This doesn’t disqualify the company in my view, but if left unchecked, the 7.9% uptick in interest expense may eventually crowd out the dividend increases which were a cornerstone of my bullish thesis last year. Trinity Industries Inc. Financials (Trinity Industries Inc. investor relations) Valuation Before writing about the valuation specifically, I should remind readers of my previous thinking on this name. One of the reasons I originally plugged my nose and purchased these shares about 10 months ago because the dividend yield was then higher than the 10-Year Treasury Note. This was one of the few companies I could find that actually paid a (slight) positive risk premium. Fast forward to the present and the dividend yield is 3.6%, and the Treasury Note is currently yielding about 3.7%, so the situation has technically reversed. I still think there’s room for growth in the dividend, but the story is not as much of a “slam dunk”, as the young kids say, as it was previously. With that out of the way, I’m of the view that in the domain of investing, everything is relative. If you buy X, you are, by definition, eschewing a host of Ys. For my part, I want my “Xs” to be a combination of cheap stock in a company that’s growing rather quickly. I should also suggest that I consider the cheapness of the stock to be more important than the growth characteristics of the company. This is one of the factors that turned me on to Trinity last year. I think it would also be worthwhile to describe what I mean by “cheap.” When I write that, what I want to see is a company trading at a relative discount to both the overall market and its own history. At the moment, the shares remain reasonably cheap, per the following. Data by YCharts Source: YCharts A rather skeptical market is only paying about $.79 for every dollar of sales. Please note also that this is near the low end of the range for the company, and in the past when the valuation dropped this low, the shares went on to do rather well. At the same time, the dividend yield remains reasonable. It’s not as attractive as it was when I bought, but there are far thinner yields that some investors are happily buying at the moment. Data by YCharts Source: YCharts In addition to looking at the ratio of price to economic value, I want to try to understand what the market is currently \"thinking\" about a given company's future. In order to do this, I turn to the work of Stephen Penman, particularly his book \"Accounting for Value.\" One of the most interesting ideas expressed in this book is that the stock price itself has some interesting information embedded within it, including the market's \"thoughts\" about a given company's future. We do this by applying some high school algebra to work out the “g” (growth) variable in a standard finance formula. The greater the expectations, the more risky the investment. According to this approach, the market currently \"thinks\" that Trinity will grow at a rate of about 5.93% from current levels. In my view, that is actually pretty optimistic, which is pretty risky in my view.  This all leaves me on the horns of a dilemma. By some metrics, the valuation remains reasonable, and by some measures it’s rather high. Given that you can earn about the same cash flow from a 10-Year Treasury Note at the moment, I’m going to cull some of my gains, while continuing to hold some shares. Specifically, I’m going to “take back” my original capital and buy a Treasury Note with it. I’ll leave the capital that I’ve “earned” in capital gains over the past 10 months in the stock. If this drops, it’ll be less emotionally painful for me.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.26.4","shortVersion":"4.26.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2465914541"}