Trinity Industries Inc.TRN is scheduled to report third-quarter 2017 results on Oct 25, after market closes.
In the preceding quarter, the company had delivered a positive earnings surprise of 6.5%. Also, its earnings surpassed the Zacks Consensus Estimate in each of the last four quarters with an average beat of 8.8%.
Let's see how things are shaping up for this announcement.
Factors Likely at Play
We expect Trinity Industries to continue struggling on the top-line front in the to-be-reported quarter, just like the previous one. Markedly, sluggish market conditions as well as weak demand for railcars are expected to weigh on the results. High costs and adverse foreign currency movement may add to the woe.
In fact, the Rail Group segment which recorded disastrous results in the second quarter, is expected to continue its poor run in the third quarter as well. Additionally, the Inland Barge Group might come up with a below-par performance mainly due to lower barge deliveries and changes in product mix.
Also, the Energy Equipment Group might perform poorly in the quarter under review owing to lower delivery volumes. The Zacks Consensus Estimate for third-quarter segmental operating profit is $22.6 million, lower than the $24.3 million reported in the second quarter of 2017.
However, the company's efforts to reward shareholders are encouraging. Of late, the stock has been boosted by the favorable ruling by a federal appeals court as well. Evidently, the court overturned a $663.4-million judgment against Trinity Industries, which had been accused of misleading the government by selling defective guardrails. We expect a detailed commentary on the issue on the conference call.
Nevertheless, our quantitative model doesn't point to an earnings beat this time. This is because Trinity Industries doesn't have the right combination of the two key ingredients - a positive Earnings ESP and a Zacks Rank #3 (Hold) or better - for increasing the odds of an earnings beat.
Zacks ESP: Trinity Industries has an Earnings ESP of -0.62%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .
Zacks Rank: Trinity Industries' Zacks Rank #3, when combined with a negative ESP, makes surprise prediction difficult.
It should be noted that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) while going into an earnings announcement.
Trinity Industries, Inc. Price and EPS Surprise
Trinity Industries, Inc. Price and EPS Surprise | Trinity Industries, Inc. Quote
Stocks to Consider
With Trinity Industries likely to disappoint, investors interested in the broader transportation sector may consider Norfolk Southern Corporation NSC , Expeditors International of Washington EXPD and Landstar System LSTR as our model shows that all these stocks possess the right combination of elements to post an earnings beat in their next releases.
NorfolkSouthern has an Earnings ESP of +0.59% and a Zacks Rank #3. The company is slated to release third-quarter 2017 results on Oct 25. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Expeditors International of Washington has an Earnings ESP of +1.68% and a Zacks Rank #3. The company will report third-quarter 2017 financial numbers on Nov 7.
Landstar System has an Earnings ESP of +1.88% and a Zacks Rank #2 (Buy). The company will release third-quarter 2017 earnings numbers on Oct 25.
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Trinity Industries, Inc. (TRN): Free Stock Analysis Report
Norfolk Souther Corporation (NSC): Free Stock Analysis Report
Expeditors International of Washington, Inc. (EXPD): Free Stock Analysis Report
Landstar System, Inc. (LSTR): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
