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Is Trinity Industries (TRN) a Good Stock for Value Investors?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Trinity Industries, Inc. (TRN - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks.
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Trinity Industries has a trailing twelve months PE ratio of 17.43, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 19.76. If we focus on the long-term PE trend, TRN’s current PE level puts it above its midpoint over the past five years, with the number having risen rapidly over the past few months.
However, the stock’s PE compares unfavorably with the industry’s trailing twelve months PE ratio, which stands at 17.16. At the very least, this indicates that the stock is relatively overvalued right now, compared to its peers.
We should also point out that Trinity Industries has a forward PE ratio (price relative to this year’s earnings) of 22.97, so it is fair to expect an increase in the company’s share price in the near future.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Trinity Industries has a P/S ratio of about 1.07. This is lower than the S&P 500 average, which comes in at 3.12 right now. Also, as we can see in the chart below, this is somewhat below the highs for this stock in particular over the past few years.
If anything this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Trinity Industries currently has a Zacks Value Style Score of ‘A,’ putting it into the top 20% of all stocks we cover from this look. This makes Trinity Industries a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, TRN has a Price-to-Book ratio (P/B ratio) of about 1.01. This is a bit lower than the industry average, which comes in at 1.16 right now. Clearly, Trinity Industries is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Trinity Industries might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘F’ and a Momentum score of ‘C’. This gives Trinity Industries a Zacks VGM score—or its overarching fundamental grade—of ‘B.’ (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter has seen three upward and no downward estimate revision in the past sixty days, while the current year has seen four upward and no downward estimate revisions in the same time frame.
As a result, the current quarter consensus estimate has increased by 14.3% in the past two months, while the current year estimate has decreased 5.1%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This positive trend signifies bullish analyst sentiment, and its Zacks Rank #2 (Buy) indicates robust fundamentals and expectations of outperformance in the near term.
Bottom Line
Trinity Industries is an inspired choice for value investors, as it is hard to beat its good lineup of statistics on this front. However, with a sluggish industry rank (bottom 39% out of more than 250 industries), its hard to get too excited about this company overall. Again, over the past two years, its industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.
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Is Trinity Industries (TRN) a Good Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
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One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Trinity Industries, Inc. (TRN - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks.
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Trinity Industries has a trailing twelve months PE ratio of 17.43, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 19.76. If we focus on the long-term PE trend, TRN’s current PE level puts it above its midpoint over the past five years, with the number having risen rapidly over the past few months.
However, the stock’s PE compares unfavorably with the industry’s trailing twelve months PE ratio, which stands at 17.16. At the very least, this indicates that the stock is relatively overvalued right now, compared to its peers.
We should also point out that Trinity Industries has a forward PE ratio (price relative to this year’s earnings) of 22.97, so it is fair to expect an increase in the company’s share price in the near future.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Trinity Industries has a P/S ratio of about 1.07. This is lower than the S&P 500 average, which comes in at 3.12 right now. Also, as we can see in the chart below, this is somewhat below the highs for this stock in particular over the past few years.
If anything this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Trinity Industries currently has a Zacks Value Style Score of ‘A,’ putting it into the top 20% of all stocks we cover from this look. This makes Trinity Industries a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, TRN has a Price-to-Book ratio (P/B ratio) of about 1.01. This is a bit lower than the industry average, which comes in at 1.16 right now. Clearly, Trinity Industries is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Trinity Industries might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘F’ and a Momentum score of ‘C’. This gives Trinity Industries a Zacks VGM score—or its overarching fundamental grade—of ‘B.’ (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter has seen three upward and no downward estimate revision in the past sixty days, while the current year has seen four upward and no downward estimate revisions in the same time frame.
As a result, the current quarter consensus estimate has increased by 14.3% in the past two months, while the current year estimate has decreased 5.1%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Trinity Industries, Inc. Price and Consensus
Trinity Industries, Inc. Price and Consensus | Trinity Industries, Inc. Quote
This positive trend signifies bullish analyst sentiment, and its Zacks Rank #2 (Buy) indicates robust fundamentals and expectations of outperformance in the near term.
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Bottom Line
Trinity Industries is an inspired choice for value investors, as it is hard to beat its good lineup of statistics on this front. However, with a sluggish industry rank (bottom 39% out of more than 250 industries), its hard to get too excited about this company overall. Again, over the past two years, its industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.
4 Surprising Tech Stocks to Keep an Eye on
Tech stocks have been a major force behind the market’s record highs, but picking the best ones to buy can be tough. There’s a simple way to invest in the success of the entire sector. Zacks has just released a Special Report revealing one thing tech companies literally cannot function without. More importantly, it reveals 4 top stocks set to skyrocket on increasing demand for these devices. I encourage you to get the report now – before the next wave of innovations really takes off.
See Stocks Now>>