Please ensure Javascript is enabled for purposes of website accessibility

Why Trinity Industries Inc Shares Crashed

By Brian D. Pacampara, CFA – Feb 19, 2016 at 11:50AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The railcar manufacturer plummets on particularly gloomy guidance.

What: Shares of railcar manufacturer Trinity Industries Inc (TRN -4.06%) were down 21.6% at 10:55 a.m. ET on Friday after its quarterly results and outlook disappointed Wall Street.

So what: Trinity's Q4 EPS of $1.30 managed to beat estimates, but a wide miss on the top line -- revenue of $1.55 billion vs. the consensus of $1.61 billion -- coupled with downbeat full-year guidance is forcing analysts to drastically lower their growth expectations. In fact, Trinity now expects barge revenue to decline a whopping 32% in 2016 with operating margins of 10%, giving investors little reason to bet on any near-term turnaround catalysts. 

Now what: Management now sees full-year EPS of $2.00 to $2.40, well below the average analyst estimate of $3.65. "Our outlook for 2016 reflects the weakening in the industrial economy that began broadly impacting our businesses late last summer," said Chairman and CEO Timothy Wallace. "In this environment, we are placing a high priority on cost containment and various initiatives to enhance our performance. We will continue to reposition and streamline our manufacturing operations as business conditions fluctuate." More important, with the stock now off a whopping 55% from its 52-week highs and trading at a single-digit forward P/E, today's near-term concerns might be providing patient Fools with a solid long-term opportunity.

Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Trinity Industries, Inc. Stock Quote
Trinity Industries, Inc.
TRN
$22.20 (-4.06%) $0.94

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.