Critical Analysis: Trinity Industries (TRN) and Wabtec (WAB)

Critical Analysis: Trinity Industries (TRN) and Wabtec (WAB)

Risk & Volatility

Trinity Industries (NYSE: TRN) and Wabtec (NYSE:WAB) are both mid-cap transportation companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, dividends, risk, profitability, analyst recommendations, earnings and institutional ownership.

Trinity Industries has a beta of 2.02, indicating that its stock price is 102% more volatile than the S&P 500. Comparatively, Wabtec has a beta of 0.91, indicating that its stock price is 9% less volatile than the S&P 500.

Dividends

Trinity Industries pays an annual dividend of $0.52 per share and has a dividend yield of 1.6%. Wabtec pays an annual dividend of $0.48 per share and has a dividend yield of 0.5%. Trinity Industries pays out 34.2% of its earnings in the form of a dividend. Wabtec pays out 14.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Trinity Industries has increased its dividend for 7 consecutive years and Wabtec has increased its dividend for 7 consecutive years.

Analyst Recommendations

This is a summary of recent recommendations for Trinity Industries and Wabtec, as provided by MarketBeat.com.

Trinity Industries presently has a consensus target price of $35.82, suggesting a potential upside of 11.86%. Wabtec has a consensus target price of $91.82, suggesting a potential upside of 1.27%. Given Trinity Industries’ higher probable upside, equities analysts clearly believe Trinity Industries is more favorable than Wabtec.

Institutional and Insider Ownership

87.9% of Trinity Industries shares are held by institutional investors. 2.2% of Trinity Industries shares are held by insiders. Comparatively, 11.5% of Wabtec shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Trinity Industries and Wabtec’s net margins, return on equity and return on assets.

Valuation & Earnings

This table compares Trinity Industries and Wabtec’s revenue, earnings per share (EPS) and valuation.

Trinity Industries has higher earnings, but lower revenue than Wabtec. Trinity Industries is trading at a lower price-to-earnings ratio than Wabtec, indicating that it is currently the more affordable of the two stocks.

Summary

Wabtec beats Trinity Industries on 9 of the 15 factors compared between the two stocks.

Trinity Industries Company Profile

Trinity Industries, Inc. provides various products and services to the energy, chemical, agriculture, transportation, and construction sectors in the United States and internationally. Its Rail Group segment offers railcars, including autorack, box, covered hopper, gondola, intermodal, tank, and open hopper cars; and railcar maintenance services. This segment serves railroads, leasing companies, and industrial shippers of various products. The company's Railcar Leasing and Management Services Group segment leases tank and freight railcars to industrial shippers and railroads; and provides management, maintenance, and administrative services. As of December 31, 2016, this segment had a fleet of 88,590 owned or leased railcars. Its Construction Products Group segment offers highway products, such as guardrail, crash cushions, and other highway barriers; aggregates, including expanded shale and clay, crushed stone, sand and gravel, asphalt rock, and other products; and trench shields and shoring products for the construction industry. This segment offers aggregates to concrete producers; commercial, residential, and highway contractors; and manufacturers of masonry products. The company's Energy Equipment Group segment manufactures structural wind towers; utility steel structures for electricity transmission and distribution; storage and distribution containers; cryogenic tanks; and tank heads for pressure and non-pressure vessels. Its Inland Barge Group segment provides various dry cargo barges, such as deck barges, and open or covered hopper barges to transport grain, coal, and aggregates; and tank barges to transport chemicals and various petroleum products, as well as fiberglass reinforced lift covers for grain barges. Trinity Industries, Inc. was founded in 1933 and is headquartered in Dallas, Texas.

Wabtec Company Profile

Westinghouse Air Brake Technologies Corporation, doing business as Wabtec Corporation, provides technology-based equipment, systems, and services for the freight rail and passenger transit vehicle industries worldwide. It operates in two segments, Freight and Transit. The Freight segment manufactures and services components for new and existing locomotive and freight cars; supplies railway electronics and positive train control equipment; offers signal design and engineering services; builds switcher locomotives; rebuilds freight locomotives; and provides heat exchangers and cooling systems for rail and other industrial markets. This segment serves publicly traded railroads; leasing companies; manufacturers of original equipment, such as locomotives and freight cars; and utilities. The Transit segment manufactures and services components for new and existing passenger transit vehicles, including regional trains, high speed trains, subway cars, light-rail vehicles, and buses; builds commuter locomotives; and refurbishes passenger transit vehicles. This segment serves public transit authorities and municipalities, leasing companies, and manufacturers of subway cars and buses. The company's products comprise positive train control equipment and electronically controlled pneumatic braking products; railway electronics, including event recorders, monitoring equipment, and end of train devices; freight car trucks and couplers; draft gears, couplers, and slack adjusters; and air compressors and dryers. Its products also include track and switch products; railway braking equipment and related components; friction products consisting of brake shoes and pads; window assemblies, and accessibility lifts and ramps for buses and subway cars; and traction motors, as well as builds, remanufactures, and overhauls commuter and switcher locomotives, and transit cars. Westinghouse Air Brake Technologies Corporation was founded in 1869 and is headquartered in Wilmerding, Pennsylvania.

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