Critical Review: Trinity Industries (TRN) versus HC2 (HCHC)

Trinity Industries (NYSE: TRN) and HC2 (NYSE:HCHC) are both transportation companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, earnings, risk, dividends and valuation.

Profitability

This table compares Trinity Industries and HC2’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Trinity Industries 5.97% 5.32% 2.47%
HC2 -6.13% -67.69% -1.67%

Volatility & Risk

Trinity Industries has a beta of 2.26, suggesting that its share price is 126% more volatile than the S&P 500. Comparatively, HC2 has a beta of 0.66, suggesting that its share price is 34% less volatile than the S&P 500.

Valuation & Earnings

This table compares Trinity Industries and HC2’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Trinity Industries $4.59 billion 1.19 $343.60 million $1.50 24.05
HC2 $1.56 billion 0.15 -$94.54 million ($2.58) -2.05

Trinity Industries has higher revenue and earnings than HC2. HC2 is trading at a lower price-to-earnings ratio than Trinity Industries, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

82.5% of Trinity Industries shares are owned by institutional investors. Comparatively, 59.9% of HC2 shares are owned by institutional investors. 2.0% of Trinity Industries shares are owned by company insiders. Comparatively, 16.0% of HC2 shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

Trinity Industries pays an annual dividend of $0.52 per share and has a dividend yield of 1.4%. HC2 does not pay a dividend. Trinity Industries pays out 34.7% of its earnings in the form of a dividend. Trinity Industries has increased its dividend for 6 consecutive years.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Trinity Industries and HC2, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Trinity Industries 1 1 6 0 2.63
HC2 0 0 1 0 3.00

Trinity Industries currently has a consensus target price of $34.14, indicating a potential downside of 5.34%. HC2 has a consensus target price of $11.50, indicating a potential upside of 116.98%. Given HC2’s stronger consensus rating and higher probable upside, analysts clearly believe HC2 is more favorable than Trinity Industries.

Summary

Trinity Industries beats HC2 on 12 of the 16 factors compared between the two stocks.

Trinity Industries Company Profile

Trinity Industries, Inc. is a diversified industrial company that owns businesses providing products and services to the energy, chemical, agriculture, transportation and construction sectors. The Company’s products and services include railcars and railcar parts; parts and steel components; the leasing, management and maintenance of railcars; highway products; construction aggregates; inland barges; structural wind towers; steel utility structures; storage and distribution containers, and trench shields and shoring products. The Company’s segments include the Rail Group, Construction Products Group, Inland Barge Group, Energy Equipment Group, Railcar Leasing and Management Services Group, and All Other. Its All Other segment includes its captive insurance and transportation companies, and other peripheral businesses. It manufactures a line of railcars, including autorack cars, box cars, covered hopper cars, gondola cars, intermodal cars, open hopper cars and tank cars.

HC2 Company Profile

HC2 Holdings, Inc. engages in construction, marine services, insurance, telecommunications, energy, life sciences, and other businesses in the United States, the United Kingdom, and internationally. The company fabricates and erects structural steel for commercial and industrial construction projects, such as buildings and office complexes, hotels and casinos, convention centers, sports arenas and stadiums, shopping malls, hospitals, dams, bridges, mines, and power plants. It also fabricates trusses and girders; and fabricates and erects water pipes, water storage tanks, pollution control scrubbers, tunnel liners, pressure vessels, strainers, filters, separators, and various customized products. In addition, the company provides subsea cable installation and maintenance services for the telecommunications sector; installation, maintenance, and repair services for fiber optic communication and power infrastructure to offshore platforms; and installation services for power cables for use in offshore wind farms and in the offshore wind market. Further, it distributes natural gas motor fuels; designs, builds, owns, acquires, operates, and maintains compressed natural gas fueling stations for transportation vehicles; and offers voice communication services for national telecommunications, mobile, prepaid, and voice over Internet protocol service operators, as well as wholesale carriers and Internet service providers. Additionally, the company provides long-term care, life, and annuity insurance products to individuals. Furthermore, it focuses on developing products to treat early osteoarthritis of the knee; develops skin lightening technology; owns licenses to create and distribute NASCAR video games; and offers analytics on broadcast TV, digital, and social media online platforms. The company was formerly known as PTGi Holding Inc. and changed its name to HC2 Holdings, Inc. in April 2014. HC2 Holdings, Inc. was founded in 1994 and is headquartered in New York, New York.

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