Trinity Industries Debt
| TRN Stock | USD 37.45 0.23 0.61% |
Trinity Industries has over 5.75 Billion in debt which may indicate that it relies heavily on debt financing. At this time, Trinity Industries' Debt To Assets are very stable compared to the past year. As of the 28th of November 2024, Long Term Debt To Capitalization is likely to grow to 0.89, while Short Term Debt is likely to drop about 19.1 M. With a high degree of financial leverage come high-interest payments, which usually reduce Trinity Industries' Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Trinity Industries' liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Trinity Industries' cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the Company is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps Trinity Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Trinity Industries' stakeholders.
Trinity Industries Quarterly Net Debt |
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For most companies, including Trinity Industries, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Trinity Industries, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Trinity Industries' management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book 2.9426 | Book Value 12.864 | Operating Margin 0.1365 | Profit Margin 0.053 | Return On Assets 0.0316 |
Given that Trinity Industries' debt-to-equity ratio measures a Company's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which Trinity Industries is acquiring new debt as a mechanism of leveraging its assets. A high debt-to-equity ratio is generally associated with increased risk, implying that it has been aggressive in financing its growth with debt. Another way to look at debt-to-equity ratios is to compare the overall debt load of Trinity Industries to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, Trinity Industries is said to be less leveraged. If creditors hold a majority of Trinity Industries' assets, the Company is said to be highly leveraged.
At this time, Trinity Industries' Non Current Liabilities Total is very stable compared to the past year. As of the 28th of November 2024, Change To Liabilities is likely to grow to about 36.2 M, while Total Current Liabilities is likely to drop about 533 M. Trinity |
Trinity Industries Bond Ratings
Trinity Industries financial ratings play a critical role in determining how much Trinity Industries have to pay to access credit markets, i.e., the amount of interest on their issued debt. The threshold between investment-grade and speculative-grade ratings has important market implications for Trinity Industries' borrowing costs.| Piotroski F Score | 3 | Frail | View |
| Beneish M Score | (6.81) | Unlikely Manipulator | View |
Trinity Industries Debt to Cash Allocation
As Trinity Industries follows its natural business cycle, the capital allocation decisions will not magically go away. Trinity Industries' decision-makers have to determine if most of the cash flows will be poured back into or reinvested in the business, reserved for other projects beyond operational needs, or paid back to stakeholders and investors.
Trinity Industries has 5.75 B in debt with debt to equity (D/E) ratio of 4.36, demonstrating that the company may be unable to create cash to meet all of its financial commitments. Trinity Industries has a current ratio of 2.07, demonstrating that it is liquid and is capable to disburse its financial commitments when the payables are due. Note however, debt could still be an excellent tool for Trinity to invest in growth at high rates of return. Trinity Industries Total Assets Over Time
Trinity Industries Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Trinity Industries uses debt to finance its assets. It includes both long-term and short-term borrowings maturing within one year. It also includes both tangible and intangible assets, such as goodwill.Trinity Industries Debt Ratio | 68.0 |
Trinity Industries Corporate Bonds Issued
Trinity Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning Trinity Industries Use of Financial Leverage
Leverage ratios show Trinity Industries' total debt position, including all outstanding obligations. In simple terms, high financial leverage means that the cost of production, along with the day-to-day running of the business, is high. Conversely, lower financial leverage implies lower fixed cost investment in the business, which is generally considered a good sign by investors. The degree of Trinity Industries' financial leverage can be measured in several ways, including ratios such as the debt-to-equity ratio (total debt / total equity), or the debt ratio (total debt / total assets).
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 5.8 B | 6 B | |
| Net Debt | 5.6 B | 5.9 B | |
| Short Term Debt | 20.1 M | 19.1 M | |
| Long Term Debt | 5.8 B | 6 B | |
| Short and Long Term Debt | 32.2 M | 30.6 M | |
| Long Term Debt Total | 5.7 B | 4.6 B | |
| Net Debt To EBITDA | 7.98 | 8.38 | |
| Debt To Equity | 5.55 | 5.83 | |
| Interest Debt Per Share | 74.13 | 77.84 | |
| Debt To Assets | 0.65 | 0.68 | |
| Long Term Debt To Capitalization | 0.85 | 0.89 | |
| Total Debt To Capitalization | 0.85 | 0.89 | |
| Debt Equity Ratio | 5.55 | 5.83 | |
| Debt Ratio | 0.65 | 0.68 | |
| Cash Flow To Debt Ratio | 0.05 | 0.05 |
Pair Trading with Trinity Industries
One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Trinity Industries position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Trinity Industries will appreciate offsetting losses from the drop in the long position's value.Moving together with Trinity Stock
Moving against Trinity Stock
| 0.86 | RUN | Sunrun Inc Aggressive Push | PairCorr |
| 0.72 | WPRT | Westport Fuel Systems | PairCorr |
| 0.56 | EFSH | 1847 Holdings LLC | PairCorr |
The ability to find closely correlated positions to Trinity Industries could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Trinity Industries when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Trinity Industries - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Trinity Industries to buy it.
The correlation of Trinity Industries is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Trinity Industries moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Trinity Industries moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Trinity Industries can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.Check out the analysis of Trinity Industries Fundamentals Over Time. To learn how to invest in Trinity Stock, please use our How to Invest in Trinity Industries guide.You can also try the Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Is Construction Machinery & Heavy Transportation Equipment space expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Trinity Industries. If investors know Trinity will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Trinity Industries listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth 0.463 | Dividend Share 1.12 | Earnings Share 2.25 | Revenue Per Share 39.739 | Quarterly Revenue Growth (0.03) |
The market value of Trinity Industries is measured differently than its book value, which is the value of Trinity that is recorded on the company's balance sheet. Investors also form their own opinion of Trinity Industries' value that differs from its market value or its book value, called intrinsic value, which is Trinity Industries' true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Trinity Industries' market value can be influenced by many factors that don't directly affect Trinity Industries' underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Trinity Industries' value and its price as these two are different measures arrived at by different means. Investors typically determine if Trinity Industries is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Trinity Industries' price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.
What is Financial Leverage?
Financial leverage is the use of borrowed money (debt) to finance the purchase of assets with the expectation that the income or capital gain from the new asset will exceed the cost of borrowing. In most cases, the debt provider will limit how much risk it is ready to take and indicate a limit on the extent of the leverage it will allow. In the case of asset-backed lending, the financial provider uses the assets as collateral until the borrower repays the loan. In the case of a cash flow loan, the general creditworthiness of the company is used to back the loan. The concept of leverage is common in the business world. It is mostly used to boost the returns on equity capital of a company, especially when the business is unable to increase its operating efficiency and returns on total investment. Because earnings on borrowing are higher than the interest payable on debt, the company's total earnings will increase, ultimately boosting stockholders' profits.Leverage and Capital Costs
The debt to equity ratio plays a role in the working average cost of capital (WACC). The overall interest on debt represents the break-even point that must be obtained to profitability in a given venture. Thus, WACC is essentially the average interest an organization owes on the capital it has borrowed for leverage. Let's say equity represents 60% of borrowed capital, and debt is 40%. This results in a financial leverage calculation of 40/60, or 0.6667. The organization owes 10% on all equity and 5% on all debt. That means that the weighted average cost of capital is (.4)(5) + (.6)(10) - or 8%. For every $10,000 borrowed, this organization will owe $800 in interest. Profit must be higher than 8% on the project to offset the cost of interest and justify this leverage.Benefits of Financial Leverage
Leverage provides the following benefits for companies:- Leverage is an essential tool a company's management can use to make the best financing and investment decisions.
- It provides a variety of financing sources by which the firm can achieve its target earnings.
- Leverage is also an essential technique in investing as it helps companies set a threshold for the expansion of business operations. For example, it can be used to recommend restrictions on business expansion once the projected return on additional investment is lower than the cost of debt.