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1. Company Snapshot

1.a. Company Description

Trinity Industries, Inc.provides rail transportation products and services under the TrinityRail name in North America.It operates in two segments, Railcar Leasing and Management Services Group, and Rail Products Group.


The Railcar Leasing and Management Services Group segment leases freight and tank railcars; originates and manages railcar leases for third-party investors; and provides fleet maintenance and management services.As of December 31, 2021, it had a fleet of 106,970 owned or leased railcars.This segment serves industrial shipper and railroad companies operating in agriculture, construction and metals, consumer products, energy, and refined products and chemicals markets.


The Rail Products Group segment manufactures freight and tank railcars for transporting various liquids, gases, and dry cargo; and offers railcar maintenance and modification services.This segment serves railroads, leasing companies, and industrial shippers of products in the agriculture, construction and metals, consumer products, energy, and refined products and chemicals markets.It sells or leases products and services through its own sales personnel and independent sales representatives.


Trinity Industries, Inc.was incorporated in 1933 and is headquartered in Dallas, Texas.

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1.b. Last Insights on TRN

Trinity Industries' recent performance was driven by strong operational metrics, including a lease fleet utilization of 96.8% and a positive 18.3% FLRD at quarter-end. The company's new railcar orders of 2,310 and deliveries of 1,815 resulted in a book-to-bill ratio of 1.3x, indicating a healthy demand for its railcar products. Additionally, the company's year-to-date cash flow from operations was a positive indicator of its financial health.

1.c. Company Highlights

2. Trinity Industries' Q3 2025 Earnings: A Mixed Bag

Trinity Industries reported total revenues of $454 million in the third quarter, down both sequentially and year-over-year due to lower external deliveries in the Rail Products Group. However, earnings per share in the quarter were $0.38, up sequentially due to favorable margin performance in the Rail Products Group, which achieved a solid operating profit margin of 7.1% despite a lower delivery environment. The actual EPS came in below estimates of $0.7. The company's leasing business continued to benefit from strong market dynamics, with higher lease rates and favorable pricing on external repairs.

Publication Date: Nov -01

📋 Highlights

Leasing Business Performance

The leasing business added over $100 million of railcars into the fleet from the secondary market and sold $80 million of railcars in the quarter. The Forward Lease Rate Differential (FLRD) dropped to 9% in the quarter due to higher expiring rates and some moderation in market rates for certain railcar types. However, renewal rates were 25.1% above expiring rates in the quarter, indicating strong sentiment in the market. As Eric Marchetto explained, "about 65% of the fleet has been repriced, with a tail of 15% of the reprice expected in the year."

Financial Position and Capital Return

Trinity Industries returned $134 million of capital to shareholders through a combination of dividends and share buybacks. The cash balance is $66 million, and total liquidity is $571 million. The loan-to-value ratio of 68.5% remains within the target range of 60% to 70%. Year-to-date cash flow from continuing operations was $187 million, with a net fleet investment year-to-date of $387 million, above the full-year guidance of $250 million to $350 million.

Outlook and Valuation

Trinity is maintaining its outlook for full-year industry deliveries of 28,000 to 33,000 railcars, reflecting the muted current railcar environment. Analysts estimate next year's revenue growth at 10.2%. With a P/E Ratio of 33.65 and an EV/EBITDA of 3.75, the market seems to be pricing in a relatively optimistic outlook. The Dividend Yield stands at 4.38%, which may be attractive to income investors. The ROE of 5.99% suggests that the company is generating decent returns on equity.

Industry Dynamics

The industry is expecting 28,000 to 33,000 deliveries, below replacement level demand, and orders can be lumpy due to the multiyear order backlog. A potential transcontinental railroad could increase fluidity and speed, potentially leading to modal share growth and industry growth. The company's management is confident in the business model and execution capabilities, as evident from the raised full-year EPS guidance to $1.55 to $1.70.

3. NewsRoom

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Trinity Industries, Inc. (TRN) Presents at Goldman Sachs Industrials and Materials Conference 2025 Transcript

Dec -04

Source: seekingalpha.com

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Capital Fund Management S.A. Buys 84,667 Shares of Trinity Industries, Inc. $TRN

Dec -04

Source: defenseworld.net

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Trinity Industries, Inc. Increases Quarterly Dividend to $0.31 / Share

Dec -03

Source: businesswire.com

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Trinity Industries, Inc. to Present at the 2025 Goldman Sachs Industrials and Materials Conference

Dec -02

Source: businesswire.com

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Trinity Industries, Inc. to Present at the 2025 Stephens Annual Investment Conference

Nov -13

Source: businesswire.com

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Trinity Industries: Attractive Yield And A Possible Market Recovery

Nov -10

Source: seekingalpha.com

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Betterware de Mexico SAPI de C (NYSE:BWMX) vs. Pattern Group (NASDAQ:PTRN) Head to Head Review

Nov -06

Source: defenseworld.net

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LuxExperience B.V. (NYSE:LUXE) & Pattern Group (NASDAQ:PTRN) Head-To-Head Contrast

Nov -04

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.29%)

6. Segments

Rail Products Group

Expected Growth: 2%

Trinity Industries' Rail Products Group growth is driven by increasing demand for railcars and components, fueled by a strong North American rail market, growth in crude oil transportation, and a backlog of orders. Additionally, the company's diversified product portfolio, including railcars, axles, and couplers, contributes to its growth.

Railcar Leasing and Management Services Group

Expected Growth: 3%

Trinity Industries' Railcar Leasing and Management Services Group's 3% growth is driven by increasing demand for rail transportation, growth in crude oil and petroleum products transportation, and a strong backlog of orders. Additionally, the company's diversified fleet and strategic acquisitions contribute to its growth, along with a focus on cost savings and operational efficiencies.

7. Detailed Products

Railcars

Trinity Industries, Inc. is a leading manufacturer of railcars in North America, offering a diverse range of railcars, including auto carriers, boxcars, covered hoppers, gondolas, intermodal cars, and tank cars.

Railcar Leasing and Management Services

Trinity Industries, Inc. provides railcar leasing and management services to railroads, shippers, and carriers, offering a fleet of over 100,000 railcars.

Tank Containers

Trinity Industries, Inc. designs, manufactures, and leases tank containers for the transportation of liquids, including chemicals, petroleum products, and food-grade products.

Barge Manufacturing

Trinity Industries, Inc. manufactures inland barges, including dry cargo barges, tank barges, and deck barges, for the transportation of goods on inland waterways.

Energy Equipment

Trinity Industries, Inc. manufactures and leases energy equipment, including frac tanks, mud tanks, and other specialized equipment, for the oil and gas industry.

Storage and Distribution Solutions

Trinity Industries, Inc. provides storage and distribution solutions, including tank storage, warehouse storage, and logistics services, for the energy, chemical, and agricultural industries.

8. Trinity Industries, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Trinity Industries, Inc. is medium due to the availability of alternative products and services in the railcar leasing and management services market.

Bargaining Power Of Customers

The bargaining power of customers for Trinity Industries, Inc. is low due to the company's strong market position and the lack of concentration among its customer base.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Trinity Industries, Inc. is medium due to the presence of multiple suppliers in the market, but the company's large scale of operations gives it some negotiating power.

Threat Of New Entrants

The threat of new entrants for Trinity Industries, Inc. is low due to the high barriers to entry in the railcar leasing and management services market, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry for Trinity Industries, Inc. is high due to the competitive nature of the railcar leasing and management services market, with several established players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 86.11%
Debt Cost 4.91%
Equity Weight 13.89%
Equity Cost 10.79%
WACC 5.73%
Leverage 619.75%

11. Quality Control: Trinity Industries, Inc. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Quality: 7.9

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A-Score: 5.3/10

Value: 5.8

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

27.65$

Current Price

27.65$

Potential

-0.00%

Expected Cash-Flows