2 Reasons to Avoid TRN and 1 Stock to Buy Instead

March 10, 2025 at 05:11 AM EDT

TRN Cover Image

Trinity currently trades at $29.55 per share and has shown little upside over the past six months, posting a small loss of 3.5%. The stock also fell short of the S&P 500’s 3.8% gain during that period.

Is now the time to buy Trinity, or should you be careful about including it in your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.

We're cautious about Trinity. Here are three reasons why there are better opportunities than TRN and a stock we'd rather own.

Why Is Trinity Not Exciting?

Operating under the trade name TrinityRail, Trinity (NYSE: TRN) is a provider of railcar products and services in North America.

1. Long-Term Revenue Growth Flatter Than a Pancake

A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Unfortunately, Trinity struggled to consistently increase demand as its $3.08 billion of sales for the trailing 12 months was close to its revenue five years ago. This was below our standards and signals it’s a lower quality business.

2. Cash Burn Ignites Concerns

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Trinity’s demanding reinvestments have drained its resources over the last five years, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 12.6%, meaning it lit $12.57 of cash on fire for every $100 in revenue. This is a stark contrast from its operating margin, and its investments in working capital/capital expenditures are the primary culprit.

Trinity Trailing 12-Month Free Cash Flow Margin

Final Judgment

Trinity isn’t a terrible business, but it doesn’t pass our bar. With its shares trailing the market in recent months, the stock trades at 18.1× forward price-to-earnings (or $29.55 per share). This valuation multiple is fair, but we don’t have much faith in the company. We're fairly confident there are better stocks to buy right now. We’d recommend looking at a fast-growing restaurant franchise with an A+ ranch dressing sauce.

Stocks We Would Buy Instead of Trinity

The Trump trade may have passed, but rates are still dropping and inflation is still cooling. Opportunities are ripe for those ready to act - and we’re here to help you pick them.

Get started by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.

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