Trinity Industries Inc (NYSE: TRN)

Sector: Industrials Industry: Railroads CIK: 0000099780
Market Cap 2.81 Bn
P/B 2.81
P/E 29.44
P/S 1.29
ROIC (Qtr) 3.88
Div Yield % 4.35
Rev 1y % (Qtr) -43.15
Total Debt (Qtr) 5.94 Bn
Debt/Equity (Qtr) 5.94
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About

Trinity Industries, Inc. (TRN), a prominent name in the North American railcar industry, operates under the well-known brand TrinityRail. The company's primary business activities encompass railcar leasing and management services, manufacturing, maintenance, and modifications, as well as other railcar logistics products and services. Founded in 1933 and headquartered in Dallas, Texas, TRN has established a robust presence in the railcar sector. The company generates revenue through various avenues, primarily railcar leasing, manufacturing, and...

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Investment thesis

Bull case

  • Operating cash flow of 383.90M provides exceptional 15.05x coverage of minority interest expenses 25.50M, showing strong core operations.
  • Operating cash flow of 383.90M provides strong 16.76x coverage of stock compensation 22.90M, indicating sustainable incentive practices.
  • Strong operating cash flow of 383.90M provides 1.86x coverage of SG&A expenses 206.20M, showing efficient operational cost management.
  • Free cash flow of (380.20M) provides excellent 3.89x coverage of dividends (97.70M), indicating sustainable shareholder returns.
  • Retained earnings of 1.02B provide strong 4.60x coverage of intangibles 221.50M, indicating quality earnings retention.

Bear case

  • Operating cash flow of 383.90M barely covers its investment activities of (507.80M), with a coverage ratio of -0.76, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 66.30M against inventory of 554.60M, the 0.12 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 383.90M provides thin coverage of dividend payments of (97.70M) with a -3.93 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of (380.20M) provides weak coverage of capital expenditures of 764.10M, with a -0.50 ratio suggesting additional external financing needs for growth initiatives.
  • Free cash flow of (380.20M) represents just -1.63x of debt issuance 233.40M, suggesting concerning reliance on leverage rather than internal cash generation for growth.

Segments Breakdown of Revenue (2024)

Product and Service Breakdown of Revenue (2024)

Peer comparison

Companies in the Railroads
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 UNP Union Pacific Corp 156.32 Bn 21.90 6.38 32.55 Bn
2 NSC Norfolk Southern Corp 98.17 Bn 49.09 8.45 17.09 Bn
3 CP Canadian Pacific Kansas City Ltd/Cn 77.60 Bn 25.11 7.13 17.31 Bn
4 CSX Csx Corp 76.97 Bn 26.64 5.46 18.87 Bn
5 CNI Canadian National Railway Co 67.54 Bn 19.60 5.35 15.71 Bn
6 WAB Westinghouse Air Brake Technologies Corp 44.42 Bn 37.97 3.98 5.54 Bn
7 TRN Trinity Industries Inc 2.81 Bn 29.44 1.29 5.94 Bn
8 GBX Greenbrier Companies Inc 0.96 Bn -16.79 0.84 1.77 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.95 1.36
EV to Cash from Ops. EV/CFO 22.19 16.53
EV to Debt EV to Debt 1.43 2.59
EV to EBIT EV/EBIT 21.55 7.63
EV to EBITDA EV/EBITDA 12.79 18.51
EV to Free Cash Flow [EV/FCF] EV/FCF -22.40 28.00
EV to Market Cap EV to Market Cap 3.03 1.04
EV to Revenue EV/Rev 3.92 2.75
Price to Book Value [P/B] P/B 2.81 3.50
Price to Earnings [P/E] P/E 29.44 21.48
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.98 2.51
Dividend Payout Ratio % Div Payout % (Qtr) 100.00 22.50
Dividend per Basic Share Div per Share (Qtr) 1.20 1.27
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -25.41 15.26
Interest Coverage Int. cover (Qtr) 1.46 0.60
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -39.56 -6.16
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -70.19 35.27
Dividend Growth (1y) % Div 1y % (Qtr) 7.14 3.76
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -21.29 17.20
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -10.62 -15.55
EBIT Growth (1y) % EBIT 1y % (Qtr) -20.55 18.03
EBT Growth (1y) % EBT 1y % (Qtr) -44.11 15.09
EPS Growth (1y) % EPS 1y % (Qtr) -44.08 15.15
FCF Growth (1y) % FCF 1y % (Qtr) -335.01 426.49
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -15.15 -4.94
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.24 0.57
Cash Payout Ratio Cash Payout (Qtr) 0.09 0.16
Cash Ratio Cash Ratio 0.00 0.90
Current Ratio Current Ratio 0.00 1.61
Debt to Equity Ratio Debt/Equity (Qtr) 5.94 1.04
Interest Cover Ratio Int Coverage (Qtr) 1.46 0.60
Times Interest Earned Times Interest Earned (Qtr) 1.46 0.60
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 32.00 -101.68
EBIT Margin % EBIT Margin % (Qtr) 18.17 -107.52
EBT Margin % EBT Margin % (Qtr) 5.73 -114.27
Gross Margin % Gross Margin % (Qtr) 26.30 37.55
Net Profit Margin % Net Margin % (Qtr) 4.40 -117.34