Is Trinity Industries (TRN) Setting Up for a Big Move?

Trinity Industries Inc. (TRN) sells and leases railroad products and railcar maintenance services in North America. The company operates under the name TrinityRail in three main segments: Railcar Leasing and Management Services Group, Rail Products Group, and All Other.

The company is seeing weak performance in its Rail Products Group due to low railcar deliveries and fewer railcars sold. TRN was negatively affected by the pandemic, as disruptions hurt railcar demand, which weighed on lease rates.

While the company’s cash balance of $178 million is low, its current ratio of 2.9 indicates it has enough liquidity to handle short-term obligations. Unfortunately, though, the company has a negative profit margin.

Revenues are down an average of 21.4% over the past five years and analysts forecast sales will be down 13.5% year over year this quarter. Earnings, though, are expected to soar 350%. The stock is highly overvalued with a trailing P/E over 1,000 and a forward P/E of 49.75. Performance has been mixed since March as shown in the chart below.

Take a look at the 1-year chart of TRN below with added notations:

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