Tweet
I really love the 609. I really loved this stock TRN. I loved it so much I bought a ton of it. Now I sold it because I like all of the money I made in it. Today I sold TRN at 84.83. That’s a 15% gain over my purchase price of 73.72 back on March 7, 2014. That’s a 15% gain in only 11 weeks. That’s a 71% annualized gain on a stock with a PE of 12. How do I make so much money on stocks which aren’t expensive…on stocks that have very little risk? I am HUGE…that’s how.
Bring me your finest meats and cheeses. Over the same period, the S&P 500 was up only 1%. That’s hysterical. I am 15x superior than the market. At least.
This trade makes 37 consecutive profitable trades of 15% or better. That is really really ridiculous. I should be on CNBC. Why don’t you send them an email and tell them about me? I should be on the cover of Time and Newsweek at the same time. I am so HUGE…yes, that’s where I should be.
Did you make monies on TRN? You? You?? YOU??? Do you have 37 consecutive profitable trades of 15% or better? You? You?? YOU???! I made so much money on this stock that the stock market is crying right now. It’s really just too easy. Can you imagine what would happen if I did this full time? I would make Warren Buffett look tiny. I would have my own show and I would say whatever I wanted and people would watch and take notes.
So…do you want another pick? Let me know if you do, and while I’m cooking up some BBQ this weekend maybe I’ll cook up another stock pick. On the other hand, if I don’t hear from you maybe I won’t waste my time.
So let me know if you like the website and like the emails. Fix your spam filter if you’re not getting the emails and you want to get them. Sign up for the website if you want to get the emails. Tell your friend to sign up if he wants to get the emails.
I want to pick more winners. I want to share them with you too, because I’m a good guy. Just let me know you’re out there. Post on the forum…..send me an email. Hug your loved ones.
Have a great weekend!
I am HUGE!
$$$MR. MARKET$$$
www.mrmarketishuge.com
================================================== =======================
03-07-2014, 03:17 PM #1 mrmarket's Avatar mrmarket mrmarket is online now
Administrator
Send a message via AIM to mrmarket Send a message via Yahoo to mrmarket
Join Date
Sep 2003
Posts
4,699
Default TRN ==> The 609 Winner$$$MR. MARKET$$$ is a proprietary investor and does not provide individual financial advice. The stocks mentioned on this forum do not represent individual buy or sell recommendations and should not be viewed as such. Individual investors should consider speaking with a professional investment adviser before making any investment decisions.
When all my friends watched American Bandstand, I watched Soul Train
When everyone else’s kids were watching Barney, my kids watched Thomas the Tank Engine:
What’s my point? My point is that while the rest of the world isn’t paying attention, I’m paying attention to trains. Trains are not appreciated. Trains are extremely undervalued. Trains are a great investment…and they are only going to get better.
Today I bought stock in Trinity Industries, Inc. (TRN) at a price of 73.72. I will sell it in 4 – 6 weeks at 84.83. Here’s why I like TRN:
Never mind that…this is why I LOVE TRN!! TRN stock is up 66% in the last 52 weeks. Meanwhile its trailing PE is only 15.5. This stock also pays a dividend. In short, the risk in buying this stock is pretty low.
Trinity Industries, Inc. provides various products and services for the energy, transportation, chemical, and construction sectors in the United States, Canada, Mexico, the United Kingdom, Singapore, and Sweden. The company’s Rail group offers railcars, including auto carrier, box, gondola, hopper, intermodal, specialty, and tank cars; and railcar parts and components comprising couplers, axles, and other equipment. This group serves railroads, leasing companies, and industrial shippers of various products. The company’s Railcar Leasing and Management Services group leases tank and freight railcars to industrial shippers and railroads in chemical, agricultural, energy, and other industries; provides management, maintenance, and administrative services; and manages railcar fleets on behalf of third parties. As of December 31, 2013, this group had a fleet of 75,685 owned or leased railcars. They also do some other stuff, but I want to focus on the railcars.
Its Board of Directors has approved a new $250 million share repurchase program that will expire on December 31, 2015. The new program becomes effective on March 7, 2014 and replaces the Company’s current share repurchase program that was approved in 2013 with an authorization of $200 million. Not only does $$$MR. MARKET$$$ like this stock. But Trinity Industries obviously likes their own stock as well.
Unless you have been living under a rock, you have witnessed our improving economy and North America's recent energy boom. We also have the ethanol mandate which means that 10% of our gasoline has to come from ethanol. Most of this ethanol is moving by rail. Not long afterwards, horizontal drilling for crude made headway. The demand for railcars soared.
The energy boom consists of unconventional production of oil in shale formations that aren’t near any pipelines. So it isn’t easy to get the oil to market. Once the oil wells are drilled, it doesn’t make any sense for oil companies to shut in their wells, because then they don’t make any money and the leaseholders of the mineral rights get all cranky. The punchline to this is oil production is only going to INCREASE. Right now, the oil is trucked away to rail transfer stations where it is taken out by railcar. The railcars go to refineries located all over the country? Why does this happen? Because this oil is much cheaper than oil based on Brent crude prices. In fact, this oil is cheaper than West Texas Intermediate oil. Refineries like this oil because they pay less for it and so the refineries make more money when they sell their gasoline, jet fuel and heating oil. Refineries don’t care of the oil gets to them by planes, trains or automobile. As long as it gets to them, they’ll buy it because it is cheaper than other crude oil.
As we produce more oil from shale…and believe me we’re going to be producing A LOT more in the next five years, they will be moving more and more oil on rail. There aren’t enough rail cars now…and we’ll need more rail cars in the future….a lot more. What does this mean? #1 Whoever owns rail cars will make a lot more money. #2 Whoever leases railcars will make a lot more money. In addition to fuel, these cars also transport chemicals, "frac sand" and other products used in the production of oil and gas. More money..more money…more money.
I’m not even done yet. When this oil boom took off, the railroad industry really wasn’t prepared to deal with it. They scrambled to accommodate and, as a result, a lot of older jerry rigged railcars were used to move the crude oil. The average age for Union Pacific's railcar fleet is over 25 years! Due to recent catastrophes and anticipated federal regulations, there could be explosive demand for new rail cars. Well, unfortunately accidents did occur and trains derailed and the crude oil that was in the trains caught fire. The DOT responded by mandating that these old cars be scrapped and new cars need to be built to replace them. Federal tank car design standards for new cars are to include an outer steel jacket around the tank car and thermal protection, full-height head shields and high-flow capacity pressure relief valves. These cars will be expensive. More money for TRN!
As of February 2014, there are 335,000 tank cars (228,000 of these are DOT-111) in the railcar fleet. Roughly 92,000 DOT-111 tank cars are used to move flammable liquids, such as crude and ethanol, with approximately 18,000 of those tank cars built to the latest industry safety standards. The outcome of federal regulatory requirements will potentially impact retrofits and new railcar deliveries substantially in the near-term. What does that mean? It means even more money for companies that are in this business….companies like TRN! The oil industry isn’t going to sit around and wait and risk shutting in production. They will do whatever it takes and spend whatever it takes. More money for TRN! MORE MONEY FOR TRN!
The Trinity Industries management team has also repeatedly expressed that they expect there will be downstream railcar demand for refined energy products and that this demand should be felt in the 2015-2016 timeframe. The three primary factors which should continue to allow Trinity Industries to succeed include rail's strong support of commodity flows and the transportation supply chain leading to sustained railcar demand, Trinity's leading market share and diversified complimentary business model, and the company's proven ability to sustain value to shareholders during economic downturns. Inquiries for tank cars are continuing at high levels as additional crude oil loading facilities and petrochemical production expansion comes online. As the energy market matures and investments for infrastructure are completed, opportunities for rail transportation will develop throughout the crude oil and petrochemical supply chains.
Trinity is uniquely positioned for growth across various economic conditions
· Seasoned management team knows how to assess the market, proactively plan for cycles and address changes in economic conditions
· Manufacturing flexibility is a core competency, and when combined with their broad product offering allows them to pursue a wide range of orders
· Cost-effective manufacturing footprint in the Southern United States and Mexico is a competitive advantage for many of their product lines
· Shared synergies across business lines provide unique opportunities
· Trinity’s lease fleet of 75,460 railcars provides a strong strategic connection to their customers, as well as a consistent long-term stream of profit and cash flow
· Strong liquidity position of nearly $1.2 billion and a solid balance sheet
· Leading manufacturer of railcars, railcar axles, and coupling devices in North America
· Broadest product offering for railcar manufacturing in North America
· Networking of customers between railcar sales and railcar leasing
· Focus on new and advanced engineering designs
· Centralized sourcing provides cost savings
· Streamlined manufacturing efficiencies
· Trinity delivered 22,015 railcars representing 45% of industry shipments during LTM 09/30/13
· Trinity received orders for 30,735 railcars representing 49% of the industry total during LTM 09/30/13
· Trinity’s order backlog was 40,050 railcars representing 54% of industry backlog as of 09/30/13
· The value of Trinity’s order backlog of approximately $5.1 billion reflects a favorable mix of railcars in the backlog and the strength in the pricing environment for certain railcar types due to strong demand from the oil, gas, and chemical industries
They are killing it! The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and attractive valuation levels.
Trinity Industries is the current market leader for railcar manufacturing and has increased its market share significantly during the past year. Trinity’s key competitors, FreightCar America and Greenbrier's manufacturing revenue decreased. American Railcar's was flat for the most part, while Trinity's increased nearly 50%. All companies saw a decrease in railcars delivered with the exception being Trinity whose railcar's delivered increased by 26%. It’s like Don Muraco eating a sandwich with Lou Albano in his corner while he’s kicking the crap out of Frankie Williams.
Trinity has continued to grow its market share despite significant competition from the peer group and other private companies. The company has built one of the largest railcar leasing operations to provide a comprehensive product and service offering for customers. The long-term outlook for railcar demand looks to be very positive and Trinity is in a stronger position to continue to lead the industry. Trinity revenue has grown at a 6% clip since 2005, while EPS growth has been ringing the bell at 20% per year during the same period. The earnings growth clearly unveils the demand and pricing pull we are seeing.
Some may fear the implementation of pipelines. Pipelines, if they ever happen, won’t stop the demand growth we’re seeing and will see for crude oil production. Rail will not go away. Rail will always give you the geographic flexibility that pipelines cannot. Plus the offloading manifolds for the unit train delivery points have already been invested in and built. As a result of the shale oil boom across North America, the number of crude oil shipments in tank cars has risen from 4,000 carloads in 2006 to 400,000 in 2013. The demand for originated crude oil by Class I rail has increased by an average 146% per year since 2009.
Lots of good news? How does this translate to earnings?
Recently TRN today announced earnings results for the fourth quarter and full year ended December 31, 2013, including the following significant highlights:
Record fourth quarter and full year 2013 earnings per common diluted share of $1.44 and $4.75, respectively
Year-over-year fourth quarter and full year revenue growth of 24% and 15%, respectively, and earnings per common diluted share growth of 60% and 49%, respectively
Rail Group receives orders for 7,125 new railcars during the fourth quarter resulting in a backlog of 39,895 units with a value of $5.0 billion
Company repurchases 639,000 shares of its common stock during the quarter at a cost of $34.3 million, resulting in full-year repurchases of 2,473,000 shares at a cost of $108.2 million
Trinity Industries, Inc. reported net income attributable to Trinity stockholders of $112.8 million, or $1.44 per common diluted share, for the fourth quarter ended December 31, 2013. Net income for the same quarter of 2012 was $71.3 million, or $0.90 per common diluted share. Revenues for the fourth quarter of 2013 increased 24% to $1.3 billion compared to revenues of $1.0 billion for the same quarter of 2012.
For the year ended December 31, 2013, the Company reported net income attributable to Trinity stockholders of $375.5 million, or $4.75 per common diluted share. In 2012, the Company reported net income of $255.2 million, or $3.19 per common diluted share. Revenues for the year ended December 31, 2013 were $4.4 billion, a 15% increase compared to revenues of $3.8 billion in 2012.
Trinity’s 4Q2013 earnings report was insane. Not only did they report a record quarter and year in terms of revenue and profit, but they are also projecting an even stronger 2014. The company expects 1Q2014 earnings between $2.45-$2.65 compared to $0.99 in 1Q2013. Trinity expects 2014 EPS to total between $6.30-$7.00, an increase of 32-50% over 2013. If Trinity is able to hit the higher end of their EPS estimates, they can effectively double EPS in just 2 years. Oh, by the way, for the last 3 quarters, Trinity has exceeded ANAL-yst estimates by over 10%.
With management expecting 30%-50% EPS growth in 2014, the future looks bright. Given Trinity's high-margin backlog, the cash and earnings it is generating from its creative capital-raising transactions, and the potential for acquisitions into long-cycle energy and infrastructure end markets they will have substantial earnings power for the foreseeable future.
There are strong catalysts in the industry with sweeping regulations coming to the oil tank cars and companies trying to stay ahead of the game. The shale boom across North America makes the continued demand for transportation by rail a necessity and Trinity stands to benefit as a result. Trinity is in the right place at the right time, with the right management and business plan. Trinity builds more railcars than any other company in America - at a time when politically-caused delays in pipeline construction are forcing energy companies to turn increasingly to rail to deliver their product. TRN also leases and manages more railcars than any other company in America.
Railroad shipments of petroleum and petroleum products surged 31% last year. The transformation of DOT-111 tank cars won't happen over night, but Trinity will be busy over the next few years building and upgrading tank cars to meet stringent safety requirements. Up to 85% of the more than 90,000 tank cars now used to haul crude and other potentially dangerous liquids across the U.S. are outdated.
The company ended 2013 with a near record backlog of $5.0 billion in railcar orders, which should keep production levels high. There will be moderate increases in demand for energy equipment and highway construction products, a result of increased infrastructure spending in North America. Operating margins in 2014 will benefit from leveraging fixed costs over a larger revenue base.
So where will earnings really be? ANAL-ysts say earnings of $6.78 over revenues of $5.2 billion. How convenient of them to split down the middle of the range of the companies own guidance. Why do we pay these ANAL-ysts money anyway? They don’t do anything except get it wrong. Having said that, the ANAL-ysts guidance is up 43% from 2013 operating EPS of $4.73 and comparing favorably to 2012 operating EPS of $3.25. Any way you slice it, TRN is a success story. But $$$MR. MARKET$$$ knows that they will spit out revenues of $5.7 billion in 2014 which would generate and EPS of $7.41/share. If you take their multiple of 15.5 and multiply it by these earnings, you get a share price of:
15.5 x $7.41 = $114.86 which is well past my sell target. Yet another $$$MR. MARKET$$$ winner…voila.
But what do I know? Let’s hear from the CEO:
Timothy R. Wallace - Chairman, Chief Executive Officer and President
“I'm pleased with our accomplishments and a strong financial results for the fourth quarter and for the entire year. We achieved a number of key financial milestones. During the quarter and the full year, our revenues, net income and EPS all reached new record levels. Our businesses are continuing to create value by leveraging their combined expertise, competencies and manufacturing capacity to produce their products. We are also making great progress in the business development area. We have a great deal of positive momentum occurring within our company.
Our Rail Group generated strong financial results in the fourth quarter, reporting a record level of quarterly revenue and operating profit. I remain impressed with the group's ability to continue to improve its performance while converting manufacturing space, making line changeovers and increasing production levels.
Our Railcar Leasing company delivered another quarter of solid results. In December, we announced a strategic alliance with Element Financial Corporation. Under the terms of this agreement, we are assisting Element to develop a diversified portfolio of up to $2 billion of leased railcars over a multiyear period.
The agreement also provides for our leasing company to be the servicer of their railcar fleet. This alliance is consistent with our strategy to continue growing our leasing platform while maintaining ongoing relationship with our lessees.
The energy renaissance in the U.S. and Canada has created strong demand for many of our storage and transportation products. During the past few years, our customers have ordered railcars and barges to transport crude oil, as well as storage tanks to hold various forms of gas products. We anticipate there will be demand for storage and transportation of products supporting the production of chemicals and petrochemicals. Our companies are in a strong position to serve this demand.
Over the long term, we expect to see additional demand developing in Mexico for our transportation and storage products that serve the oil, gas and chemicals industries.
Trinity's financial health remains solid and we're in a strong position with a large backlog of orders in our major businesses. Our businesses are driven by sustainable progress and are constantly striving to reach new levels of achievement. We're continuing to devote resources to identify acquisition candidates that have products, services, technology and competencies that enrich and expand our industrial manufacturing platforms.”
I’ve made a lot of money on stocks over the last few year, but this company has all of the many great things going for it. Great price momentum, great management, growing industry and still very reasonably priced. I’m workin on the railroad all the live long day!
I am HUGE!!
$$$MR. MARKET$$$
$$$MR. MARKET$$$ is a proprietary investor and does not provide individual financial advice. The stocks mentioned on this forum do not represent individual buy or sell recommendations and should not be viewed as such. Individual investors should consider speaking with a professional investment adviser before making any investment decisions.
Bring me your finest meats and cheeses. Over the same period, the S&P 500 was up only 1%. That’s hysterical. I am 15x superior than the market. At least.
This trade makes 37 consecutive profitable trades of 15% or better. That is really really ridiculous. I should be on CNBC. Why don’t you send them an email and tell them about me? I should be on the cover of Time and Newsweek at the same time. I am so HUGE…yes, that’s where I should be.
Did you make monies on TRN? You? You?? YOU??? Do you have 37 consecutive profitable trades of 15% or better? You? You?? YOU???! I made so much money on this stock that the stock market is crying right now. It’s really just too easy. Can you imagine what would happen if I did this full time? I would make Warren Buffett look tiny. I would have my own show and I would say whatever I wanted and people would watch and take notes.
So…do you want another pick? Let me know if you do, and while I’m cooking up some BBQ this weekend maybe I’ll cook up another stock pick. On the other hand, if I don’t hear from you maybe I won’t waste my time.
So let me know if you like the website and like the emails. Fix your spam filter if you’re not getting the emails and you want to get them. Sign up for the website if you want to get the emails. Tell your friend to sign up if he wants to get the emails.
I want to pick more winners. I want to share them with you too, because I’m a good guy. Just let me know you’re out there. Post on the forum…..send me an email. Hug your loved ones.
Have a great weekend!
I am HUGE!
$$$MR. MARKET$$$
www.mrmarketishuge.com
================================================== =======================
03-07-2014, 03:17 PM #1 mrmarket's Avatar mrmarket mrmarket is online now
Administrator
Send a message via AIM to mrmarket Send a message via Yahoo to mrmarket
Join Date
Sep 2003
Posts
4,699
Default TRN ==> The 609 Winner$$$MR. MARKET$$$ is a proprietary investor and does not provide individual financial advice. The stocks mentioned on this forum do not represent individual buy or sell recommendations and should not be viewed as such. Individual investors should consider speaking with a professional investment adviser before making any investment decisions.
When all my friends watched American Bandstand, I watched Soul Train
When everyone else’s kids were watching Barney, my kids watched Thomas the Tank Engine:
What’s my point? My point is that while the rest of the world isn’t paying attention, I’m paying attention to trains. Trains are not appreciated. Trains are extremely undervalued. Trains are a great investment…and they are only going to get better.
Today I bought stock in Trinity Industries, Inc. (TRN) at a price of 73.72. I will sell it in 4 – 6 weeks at 84.83. Here’s why I like TRN:
Never mind that…this is why I LOVE TRN!! TRN stock is up 66% in the last 52 weeks. Meanwhile its trailing PE is only 15.5. This stock also pays a dividend. In short, the risk in buying this stock is pretty low.
Trinity Industries, Inc. provides various products and services for the energy, transportation, chemical, and construction sectors in the United States, Canada, Mexico, the United Kingdom, Singapore, and Sweden. The company’s Rail group offers railcars, including auto carrier, box, gondola, hopper, intermodal, specialty, and tank cars; and railcar parts and components comprising couplers, axles, and other equipment. This group serves railroads, leasing companies, and industrial shippers of various products. The company’s Railcar Leasing and Management Services group leases tank and freight railcars to industrial shippers and railroads in chemical, agricultural, energy, and other industries; provides management, maintenance, and administrative services; and manages railcar fleets on behalf of third parties. As of December 31, 2013, this group had a fleet of 75,685 owned or leased railcars. They also do some other stuff, but I want to focus on the railcars.
Its Board of Directors has approved a new $250 million share repurchase program that will expire on December 31, 2015. The new program becomes effective on March 7, 2014 and replaces the Company’s current share repurchase program that was approved in 2013 with an authorization of $200 million. Not only does $$$MR. MARKET$$$ like this stock. But Trinity Industries obviously likes their own stock as well.
Unless you have been living under a rock, you have witnessed our improving economy and North America's recent energy boom. We also have the ethanol mandate which means that 10% of our gasoline has to come from ethanol. Most of this ethanol is moving by rail. Not long afterwards, horizontal drilling for crude made headway. The demand for railcars soared.
The energy boom consists of unconventional production of oil in shale formations that aren’t near any pipelines. So it isn’t easy to get the oil to market. Once the oil wells are drilled, it doesn’t make any sense for oil companies to shut in their wells, because then they don’t make any money and the leaseholders of the mineral rights get all cranky. The punchline to this is oil production is only going to INCREASE. Right now, the oil is trucked away to rail transfer stations where it is taken out by railcar. The railcars go to refineries located all over the country? Why does this happen? Because this oil is much cheaper than oil based on Brent crude prices. In fact, this oil is cheaper than West Texas Intermediate oil. Refineries like this oil because they pay less for it and so the refineries make more money when they sell their gasoline, jet fuel and heating oil. Refineries don’t care of the oil gets to them by planes, trains or automobile. As long as it gets to them, they’ll buy it because it is cheaper than other crude oil.
As we produce more oil from shale…and believe me we’re going to be producing A LOT more in the next five years, they will be moving more and more oil on rail. There aren’t enough rail cars now…and we’ll need more rail cars in the future….a lot more. What does this mean? #1 Whoever owns rail cars will make a lot more money. #2 Whoever leases railcars will make a lot more money. In addition to fuel, these cars also transport chemicals, "frac sand" and other products used in the production of oil and gas. More money..more money…more money.
I’m not even done yet. When this oil boom took off, the railroad industry really wasn’t prepared to deal with it. They scrambled to accommodate and, as a result, a lot of older jerry rigged railcars were used to move the crude oil. The average age for Union Pacific's railcar fleet is over 25 years! Due to recent catastrophes and anticipated federal regulations, there could be explosive demand for new rail cars. Well, unfortunately accidents did occur and trains derailed and the crude oil that was in the trains caught fire. The DOT responded by mandating that these old cars be scrapped and new cars need to be built to replace them. Federal tank car design standards for new cars are to include an outer steel jacket around the tank car and thermal protection, full-height head shields and high-flow capacity pressure relief valves. These cars will be expensive. More money for TRN!
As of February 2014, there are 335,000 tank cars (228,000 of these are DOT-111) in the railcar fleet. Roughly 92,000 DOT-111 tank cars are used to move flammable liquids, such as crude and ethanol, with approximately 18,000 of those tank cars built to the latest industry safety standards. The outcome of federal regulatory requirements will potentially impact retrofits and new railcar deliveries substantially in the near-term. What does that mean? It means even more money for companies that are in this business….companies like TRN! The oil industry isn’t going to sit around and wait and risk shutting in production. They will do whatever it takes and spend whatever it takes. More money for TRN! MORE MONEY FOR TRN!
The Trinity Industries management team has also repeatedly expressed that they expect there will be downstream railcar demand for refined energy products and that this demand should be felt in the 2015-2016 timeframe. The three primary factors which should continue to allow Trinity Industries to succeed include rail's strong support of commodity flows and the transportation supply chain leading to sustained railcar demand, Trinity's leading market share and diversified complimentary business model, and the company's proven ability to sustain value to shareholders during economic downturns. Inquiries for tank cars are continuing at high levels as additional crude oil loading facilities and petrochemical production expansion comes online. As the energy market matures and investments for infrastructure are completed, opportunities for rail transportation will develop throughout the crude oil and petrochemical supply chains.
Trinity is uniquely positioned for growth across various economic conditions
· Seasoned management team knows how to assess the market, proactively plan for cycles and address changes in economic conditions
· Manufacturing flexibility is a core competency, and when combined with their broad product offering allows them to pursue a wide range of orders
· Cost-effective manufacturing footprint in the Southern United States and Mexico is a competitive advantage for many of their product lines
· Shared synergies across business lines provide unique opportunities
· Trinity’s lease fleet of 75,460 railcars provides a strong strategic connection to their customers, as well as a consistent long-term stream of profit and cash flow
· Strong liquidity position of nearly $1.2 billion and a solid balance sheet
· Leading manufacturer of railcars, railcar axles, and coupling devices in North America
· Broadest product offering for railcar manufacturing in North America
· Networking of customers between railcar sales and railcar leasing
· Focus on new and advanced engineering designs
· Centralized sourcing provides cost savings
· Streamlined manufacturing efficiencies
· Trinity delivered 22,015 railcars representing 45% of industry shipments during LTM 09/30/13
· Trinity received orders for 30,735 railcars representing 49% of the industry total during LTM 09/30/13
· Trinity’s order backlog was 40,050 railcars representing 54% of industry backlog as of 09/30/13
· The value of Trinity’s order backlog of approximately $5.1 billion reflects a favorable mix of railcars in the backlog and the strength in the pricing environment for certain railcar types due to strong demand from the oil, gas, and chemical industries
They are killing it! The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and attractive valuation levels.
Trinity Industries is the current market leader for railcar manufacturing and has increased its market share significantly during the past year. Trinity’s key competitors, FreightCar America and Greenbrier's manufacturing revenue decreased. American Railcar's was flat for the most part, while Trinity's increased nearly 50%. All companies saw a decrease in railcars delivered with the exception being Trinity whose railcar's delivered increased by 26%. It’s like Don Muraco eating a sandwich with Lou Albano in his corner while he’s kicking the crap out of Frankie Williams.
Trinity has continued to grow its market share despite significant competition from the peer group and other private companies. The company has built one of the largest railcar leasing operations to provide a comprehensive product and service offering for customers. The long-term outlook for railcar demand looks to be very positive and Trinity is in a stronger position to continue to lead the industry. Trinity revenue has grown at a 6% clip since 2005, while EPS growth has been ringing the bell at 20% per year during the same period. The earnings growth clearly unveils the demand and pricing pull we are seeing.
Some may fear the implementation of pipelines. Pipelines, if they ever happen, won’t stop the demand growth we’re seeing and will see for crude oil production. Rail will not go away. Rail will always give you the geographic flexibility that pipelines cannot. Plus the offloading manifolds for the unit train delivery points have already been invested in and built. As a result of the shale oil boom across North America, the number of crude oil shipments in tank cars has risen from 4,000 carloads in 2006 to 400,000 in 2013. The demand for originated crude oil by Class I rail has increased by an average 146% per year since 2009.
Lots of good news? How does this translate to earnings?
Recently TRN today announced earnings results for the fourth quarter and full year ended December 31, 2013, including the following significant highlights:
Record fourth quarter and full year 2013 earnings per common diluted share of $1.44 and $4.75, respectively
Year-over-year fourth quarter and full year revenue growth of 24% and 15%, respectively, and earnings per common diluted share growth of 60% and 49%, respectively
Rail Group receives orders for 7,125 new railcars during the fourth quarter resulting in a backlog of 39,895 units with a value of $5.0 billion
Company repurchases 639,000 shares of its common stock during the quarter at a cost of $34.3 million, resulting in full-year repurchases of 2,473,000 shares at a cost of $108.2 million
Trinity Industries, Inc. reported net income attributable to Trinity stockholders of $112.8 million, or $1.44 per common diluted share, for the fourth quarter ended December 31, 2013. Net income for the same quarter of 2012 was $71.3 million, or $0.90 per common diluted share. Revenues for the fourth quarter of 2013 increased 24% to $1.3 billion compared to revenues of $1.0 billion for the same quarter of 2012.
For the year ended December 31, 2013, the Company reported net income attributable to Trinity stockholders of $375.5 million, or $4.75 per common diluted share. In 2012, the Company reported net income of $255.2 million, or $3.19 per common diluted share. Revenues for the year ended December 31, 2013 were $4.4 billion, a 15% increase compared to revenues of $3.8 billion in 2012.
Trinity’s 4Q2013 earnings report was insane. Not only did they report a record quarter and year in terms of revenue and profit, but they are also projecting an even stronger 2014. The company expects 1Q2014 earnings between $2.45-$2.65 compared to $0.99 in 1Q2013. Trinity expects 2014 EPS to total between $6.30-$7.00, an increase of 32-50% over 2013. If Trinity is able to hit the higher end of their EPS estimates, they can effectively double EPS in just 2 years. Oh, by the way, for the last 3 quarters, Trinity has exceeded ANAL-yst estimates by over 10%.
With management expecting 30%-50% EPS growth in 2014, the future looks bright. Given Trinity's high-margin backlog, the cash and earnings it is generating from its creative capital-raising transactions, and the potential for acquisitions into long-cycle energy and infrastructure end markets they will have substantial earnings power for the foreseeable future.
There are strong catalysts in the industry with sweeping regulations coming to the oil tank cars and companies trying to stay ahead of the game. The shale boom across North America makes the continued demand for transportation by rail a necessity and Trinity stands to benefit as a result. Trinity is in the right place at the right time, with the right management and business plan. Trinity builds more railcars than any other company in America - at a time when politically-caused delays in pipeline construction are forcing energy companies to turn increasingly to rail to deliver their product. TRN also leases and manages more railcars than any other company in America.
Railroad shipments of petroleum and petroleum products surged 31% last year. The transformation of DOT-111 tank cars won't happen over night, but Trinity will be busy over the next few years building and upgrading tank cars to meet stringent safety requirements. Up to 85% of the more than 90,000 tank cars now used to haul crude and other potentially dangerous liquids across the U.S. are outdated.
The company ended 2013 with a near record backlog of $5.0 billion in railcar orders, which should keep production levels high. There will be moderate increases in demand for energy equipment and highway construction products, a result of increased infrastructure spending in North America. Operating margins in 2014 will benefit from leveraging fixed costs over a larger revenue base.
So where will earnings really be? ANAL-ysts say earnings of $6.78 over revenues of $5.2 billion. How convenient of them to split down the middle of the range of the companies own guidance. Why do we pay these ANAL-ysts money anyway? They don’t do anything except get it wrong. Having said that, the ANAL-ysts guidance is up 43% from 2013 operating EPS of $4.73 and comparing favorably to 2012 operating EPS of $3.25. Any way you slice it, TRN is a success story. But $$$MR. MARKET$$$ knows that they will spit out revenues of $5.7 billion in 2014 which would generate and EPS of $7.41/share. If you take their multiple of 15.5 and multiply it by these earnings, you get a share price of:
15.5 x $7.41 = $114.86 which is well past my sell target. Yet another $$$MR. MARKET$$$ winner…voila.
But what do I know? Let’s hear from the CEO:
Timothy R. Wallace - Chairman, Chief Executive Officer and President
“I'm pleased with our accomplishments and a strong financial results for the fourth quarter and for the entire year. We achieved a number of key financial milestones. During the quarter and the full year, our revenues, net income and EPS all reached new record levels. Our businesses are continuing to create value by leveraging their combined expertise, competencies and manufacturing capacity to produce their products. We are also making great progress in the business development area. We have a great deal of positive momentum occurring within our company.
Our Rail Group generated strong financial results in the fourth quarter, reporting a record level of quarterly revenue and operating profit. I remain impressed with the group's ability to continue to improve its performance while converting manufacturing space, making line changeovers and increasing production levels.
Our Railcar Leasing company delivered another quarter of solid results. In December, we announced a strategic alliance with Element Financial Corporation. Under the terms of this agreement, we are assisting Element to develop a diversified portfolio of up to $2 billion of leased railcars over a multiyear period.
The agreement also provides for our leasing company to be the servicer of their railcar fleet. This alliance is consistent with our strategy to continue growing our leasing platform while maintaining ongoing relationship with our lessees.
The energy renaissance in the U.S. and Canada has created strong demand for many of our storage and transportation products. During the past few years, our customers have ordered railcars and barges to transport crude oil, as well as storage tanks to hold various forms of gas products. We anticipate there will be demand for storage and transportation of products supporting the production of chemicals and petrochemicals. Our companies are in a strong position to serve this demand.
Over the long term, we expect to see additional demand developing in Mexico for our transportation and storage products that serve the oil, gas and chemicals industries.
Trinity's financial health remains solid and we're in a strong position with a large backlog of orders in our major businesses. Our businesses are driven by sustainable progress and are constantly striving to reach new levels of achievement. We're continuing to devote resources to identify acquisition candidates that have products, services, technology and competencies that enrich and expand our industrial manufacturing platforms.”
I’ve made a lot of money on stocks over the last few year, but this company has all of the many great things going for it. Great price momentum, great management, growing industry and still very reasonably priced. I’m workin on the railroad all the live long day!
I am HUGE!!
$$$MR. MARKET$$$
$$$MR. MARKET$$$ is a proprietary investor and does not provide individual financial advice. The stocks mentioned on this forum do not represent individual buy or sell recommendations and should not be viewed as such. Individual investors should consider speaking with a professional investment adviser before making any investment decisions.
Comment