Shares of Triton International (TRTN 2.38%) climbed 13% on Friday after the lessor of intermodal freight containers reported better-than-expected quarterly results. The company is holding up well despite pandemic-related challenges, and Wall Street is noticing.
Before markets opened on Friday, Triton International reported second-quarter adjusted earnings of $0.86 per share on revenue of $321.4 million, beating consensus estimates for $0.78 per share in earnings on $309 million in sales. Overall revenue held up well, down just 5% year over year.
The company confirmed that the pandemic and resulting economic shutdowns "have led to a significant decrease in global trade," saying that Triton customers estimate container transport volumes were down 15% year over year in the second quarter.
In a statement, CEO Brian M. Sondey said that customers including major shipping lines have been aggressive in reducing expenses, and that low fuel prices have helped soften the blow.
"We have been concerned that the sharp decrease in global container volumes this year would increase the financial challenges facing our customers," Sondey said. "While we are not yet through the pandemic, container freight rates and the financial performance of our customers have generally held up better than anticipated."
Bank of America analyst Ken Hoexter is a believer, issuing a rare double upgrade of Triton post-earnings, lifting the company from underperform to a buy. Hoexter said he believes Triton is well positioned to benefit from any economic recovery.
As Sondey notes, we're not yet through the pandemic. There is going to be continued uncertainty surrounding transport stocks for as long as economic activity is affected. But Triton says its customers are reporting that volumes are improving as Europe and parts of the United States emerge from shutdowns.
Even after the rally Friday, shares of Triton are still down 14.9% for the year. It's too soon to give the "all clear" signal, but investors have every reason to be encouraged by the company's progress.