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Economic Recovery Bodes Well For Trinity Industries

By: Investor's Business Daily
Posted: 1/10/2014 4:49:00 PM
Referenced Stocks: TRN

Companies can be successful in niche markets. Others are diversified, offering products and services in several different markets.Trinity Industries ( TRN ) is the latter, poised to benefit from an improving economy.

The company caters to the energy, transportation, chemical and construction sectors, providing everything from railcars and highway guardrails to aggregates, inland barges and structural wind towers. Demand remains strong for the company's energy storage and transportation products.

The company's consistent track record of earnings and sales growth speaks for itself.

Shares soared 9% when the company reported third-quarter results and gave bullish guidance in late October. Earnings of $1.26 a share rose 59% from a year before. Sales rose 22% to $1.1 billion, a nice acceleration from 7% growth in the second quarter. Its Rail Group made up 72% of total revenue.

Commenting on the results, CEO Tim Wallace said: "Our portfolio of businesses remains well-positioned to serve the fast-growing North American oil, gas and chemical industries, and we are prepared to respond to demand increases in other industries should broader economic activity improve."

Among the highlights of the quarter, the company's rail segment received orders for 5,610 new railcars, giving it a current backlog of just more than 40,000 units worth $5.1 billion. Its structural wind towers business received orders totaling $442 million.

Full-year profit is seen rising 42% in 2013 and 27% in 2014. Estimates have been heading higher. Fourth-quarter earnings aren't due until mid-February.

In December, the company announced a quarterly dividend of 15 cents a share, payable Jan. 31 to shareholders of record Jan. 15. Trinity currently yields 1.1%.

Trinity has been consolidating gains in healthy fashion as it sets up in a cup-with-handle base with a potential buy point of 56.51.