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Trinity (TRN) Gains on Investor-Friendly Moves Amid Coronavirus

We recently issued an updated report on Trinity Industries, Inc. TRN.

We are impressed with Trinity’s efforts to reward its investors. In December, the company announced an 11% hike in its quarterly dividend to 21 cents per share (annually: 84 cents). The move is especially commendable, given the challenges the company is facing due to disruptions caused by coronavirus. Additionally, it returned $193 million to shareholders through dividends and share repurchases in the first nine months of 2020.

At the end of the third quarter, Trinity did not have any current debt, while its cash and equivalents stood at $121 million. Moreover, its current ratio, a measure of liquidity, stood at 2.34 at the end of third-quarter 2020 that suggests 36.8% year-over-year increase.

Meanwhile, economic slowdown caused by the coronavirus pandemic is exerting pressure on Trinity’s railcar demand. While railcar demand has recovered from the “pandemic lows”, it is still “tepid” amid economic uncertainty, the company stated at an Investor Day held in November.

Dismal performance of Trinity’s Rail Products Group is also concerning. The segment’s below-par performance is due to lower deliveries in the Rail Products Group and fewer railcars sold from the lease fleet.

Zacks Rank & Stocks to Consider

Trinity currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Transportation sector are Knight-Swift Transportation Holdings Inc. KNX, Landstar System, Inc. LSTR and Herc Holdings Inc. HRI. Landstar carries a Zacks Rank #2 (Buy), while Knight-Swift and Herc Holdings sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term expected earnings per share (three to five years) growth rate for Knight-Swift, Landstar and Herc Holdings is pegged at 15%, 12% and 12.6%, respectively.

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