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Trinity (TRN) Faces Supply Chain Disruptions & Higher Expenses

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We have recently updated a report on Trinity Industries, Inc. (TRN - Free Report) .

Trinity’s operations are being hurt by supply chain disruptions as well as labor shortages and turnover. Lower deliveries and a shift in the mix of railcar products and services sold are affecting revenues in the Rail Products Group. Revenues in the unit declined 10.8% year over year in the third quarter.

Higher selling, engineering, and administrative expenses are denting the company’s bottom line. During the third quarter, selling, engineering, and administrative expenses rose to $54.3 million from $51.2 million in the year-ago period due to employee-related cost increases like incentive-based compensation.

An improvement in cash and cash equivalents bodes well for Trinity. At the end of the third quarter, the company’s cash and cash equivalents was $221.8 million, higher than $132 million at the end of December 2020.

Zacks Rank & Stocks to Consider

Trinity currently carries a Zacks Rank #5 (Strong Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the broader Zacks Transportation sector are J.B. Hunt Transport Services (JBHT - Free Report) , FedEx Corporation (FDX - Free Report) and Schneider National (SNDR - Free Report) .

The long-term expected earnings per share (three to five years) growth rate for J.B. Hunt is pegged at 15%. JBHT is benefiting from strong performances across all its segments. The Dedicated Contract Services (DCS) unit is being aided by fleet-productivity improvement and a rise in average revenue-producing trucks. The Integrated Capacity Solutions (ICS) unit is gaining from a favorable customer freight mix as well as higher contractual and spot rates.

JBHT’s measures to reward its shareholders are encouraging. Driven by the tailwinds, the stock has increased 32.9% in the past year. J.B. Hunt currently carries a Zacks Rank #2 (Buy).

The long-term expected earnings per share (three to five years) growth rate for FedEx is pegged at 12%. FDX is benefitting from a surge in e-commerce demand amid the pandemic.

FDX exited first-quarter fiscal 2022 with cash and equivalents of $6,853 million, higher than its current debt of $125 million. Driven by the tailwinds, the stock has moved up 3% in the past year. FedEx currently carries a Zacks Rank #2.

The long-term expected earnings per share (three to five years) growth rate for Schneider is pegged at 20.7%. SNDR benefits from strong performance in the Intermodal and Logistics units.

SNDR’s third-quarter cash balance is also encouraging. Driven by the tailwinds, the stock has moved up 16.1% in the past year. Schneider carries a Zacks Rank #2.
 

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