What happened
Shares of Trinity Industries Inc. (TRN 2.31%) tumbled on Thursday, slumping more than 13% by 11:30 a.m. EDT after reporting lackluster third-quarter results.
So what
Trinity Industries reported $930.9 million of revenue for the third quarter. Not only was that much lower than the $973.6 million in sales it delivered in the year-ago period, but it was $11.1 million below analysts' expectations. Meanwhile, adjusted earnings came in at $0.39 per share, which was $0.03 per share below the consensus estimate.
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One of the culprits was the company's rail group. While revenue rose from $492.4 million to $506.8 million, operating profit slumped to $32.9 million from $50.5 million. On the one hand, the company benefited from higher volumes in its maintenance service business, which helped boost revenue. However, lower railcar deliveries, pricing pressures on certain railcar types, and production inefficiencies negatively impacted results.
The company's energy equipment group also posted weaker results. Revenue in the segment slumped from $246.2 million in the year-ago period to $218.2 million, while the group went from reporting an operating profit of $26.3 million to a loss of $13.7 million. The primary issues were a decrease in volumes in the group's wind tower product line and a writedown of assets in certain businesses that the company intends on selling.
Now what
Trinity Industries is in the midst of a major transition, as it's spinning off its infrastructure businesses -- including its energy equipment group -- into a separate publicly traded company: Arcosa. Trinity expects to complete the spinoff on Nov. 1. Because of that transition, shares of Trinity will likely remain volatile, especially until it demonstrates an ability to at least meet expectations. That's why investors might want to watch this stock from the sidelines for now and consider buying one of these top stocks instead.
