Why Is Triton (TRTN) Down 37.6% Since Last Earnings Report?

A month has gone by since the last earnings report for Triton International (TRTN). Shares have lost about 37.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Triton due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Triton International Q4 Earnings Miss

Triton International's fourth-quarter 2019 earnings per share of $1.07 missed the Zacks Consensus Estimate of $1.14. The bottom line also decreased 14.4% year over year. Results were hurt by low demand for new containers due to weak trade growth as a result of the U.S.-China trade tensions. Further, quarterly revenues of $331.18 million declined 6.8% year over year due to 7.3% fall in revenues from operating leases.

Equipment trading revenues of $17.16 million plunged 34.7% from the year-ago quarter’s figure. Trading margin came in at $2.27 million compared with $6.13 million a year ago.

The company generated a return on equity of 14.6% in the reported quarter compared with 17.7% in the year-ago period. Total operating expenses inched up slightly to $175.81 million.

Additionally, Triton International exited the fourth quarter with average utilization of 95.8%, down 90 basis points sequentially.

The company bought back 6.9 million shares during 2019. In fact, it purchased approximately 8.9 million shares for $281.6 million as of Feb 7, 2020 under the share buyback plan cleared in August 2018. Moreover, the board announced a quarterly cash dividend of 52 cents per share, payable Mar 27, 2020 to its shareholders of record as of Mar 13.

The company’s board also approved a cash dividend of 53.125 cents per share on its 8.50% Series A Preferred Shares, a cash dividend of 50 cents on its 8% Series B Preferred Shares, a cash dividend amounting to 46 cents on its 7.375% Series C Preferred Shares and an initial dividend of 24.349 cents on its 6.875% Series D Preferred Shares. Each dividend is payable to shareholders on Mar 16, of record as of Mar 9.

Q1 Outlook

The company’s first-quarter 2020 performance is likely to be affected by seasonal sluggishness and higher selling, general and administrative expenses. Reduced lease rates are also expected to hurt results in the period. Consequently, adjusted net income per share is anticipated to decline sequentially in the quarter.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.