Should the value investor choose Triton International (TRTN) now?



Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that go unnoticed and are attractive buys, or offer great discounts off their fair value?

One way to find these companies is to look at several key financial indicators and ratios, many of which are crucial in the process of selecting value stocks. Let’s put Triton International Limited TRTN into this equation and find out if this is a good choice for value investors right now, or if investors who subscribe to this methodology should look elsewhere for the best choices:

P / E ratio

A key metric that value investors always look at is the price / earnings ratio, or PE for short. It shows us how much investors are willing to pay for every dollar in profit in any given stock, and it’s easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the industry / sector average; and c) how it compares to the market as a whole.

On this front, Triton International has a 12-month PE ratio of 7.57, as you can see in the chart below:

Image source: Zacks Investment Research

This level actually compares quite favorably to the market as a whole, as the PE for the S&P 500 is around 25.15. If we focus on the long term trend of PE, Triton International’s current PE level puts it below its midpoint over the past five years.

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Image source: Zacks Investment Research

Additionally, the stock’s PE compares favorably with Zacks’ Transportation Industry – Equipment and Leasing industry year-over-year PE ratio of 16.53. At the very least, it indicates that the title is currently relatively undervalued compared to its peers.

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Image source: Zacks Investment Research

We should also point out that Triton International has a futures PE (price to earnings for this year) ratio of just 6.69, so it’s fair to say that a slightly more value-driven path might be ahead for short-term shares of Triton International. too much.

P / S ratio

Another key indicator to note is the price / sales ratio. This approach compares the price of a given stock to its total sales, where a lower reading is generally considered better. Some people like this value metric more than others because it looks at sales, something that is much harder to manipulate with accounting tricks than profits.

Currently, Triton International has a P / S ratio of approximately 2.35. That’s below the S&P 500 average, which currently sits at 5.02. Also, as we can see in the graph below, that number is below the highs of this particular stock in recent years.

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Image source: Zacks Investment Research

On the contrary, TRTN sits in the lower end of its range over the period from a P / S metric, suggesting some level of undervalued trading, at least by historical standards.

Broad value outlook

Overall, Triton International currently has a Zacks value score of A, which places it in the top 20% of all stocks we cover from this look. This makes Triton International a solid choice for value investors.

What about the stock as a whole?

While Triton International may be a good choice for value investors, there are many other factors to consider before investing in this name. In particular, it’s worth noting that the company has a Growth Score of F and Momentum Score of C. This gives TRTN a Zacks VGM score – or its overall fundamental score – of A. (You can read more at Zacks style scores here >>)

Meanwhile, the company’s recent earnings estimates have been encouraging. The current year has seen five estimates increase in the last sixty days compared to three decreases, while the estimate for the year 2021 has seen three upward revisions against one downward during the same. period.

This had a positive impact on the consensus estimate, as the current year’s consensus estimate increased by 19.7% in the past two months, while the year 2021 estimate ‘is improved by 1.4%. You can see the trend of the consensus estimate and recent stock price development in the chart below:

Price and consensus of Triton International Limited

Price and consensus of Triton International Limited

Triton International Limited price-consensus-chart | Quotation Triton International Limited

Despite this positive trend, the stock has a Zacks Rank # 3 (Hold), which indicates the company’s near-term online performance expectations.

Final result

Triton International is an inspired choice for value investors, as its incredible range of statistics is hard to beat on this front. A strong industry ranking (among the top 11% of over 250 industries) further inspires our confidence.

However, a Rank 3 of Zacks makes it hard to get too excited about this business as a whole. In fact, over the past couple of years, the Zacks Transportation – Equipment and Leasing industry has clearly underperformed the market as a whole, as you can see below:

Zacks investment research
Image source: Zacks Investment Research

So, value investors might want to wait for industry trends to turn around in this name first, but once that happens, this stock could be a compelling choice.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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