The Department of Transportation's new rules will require the replacement of the older, least safe tank cars currently in use within three years, according to the New York Times. The old cars need to be replaced by new cars with thicker shells, higher safety shields, and better fire protection.
Newer tank cars made since 2011 have more safety features have to be retrofitted or replaced by 2020.
The new rules follow a series of train derailments, oil spills, and explosions that involved oil trains in the U.S., and took more than two years to put into place.
Trinity Industries stock rose on the news as it manufactures tank cars.
TheStreet Ratings team rates TRINITY INDUSTRIES as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate TRINITY INDUSTRIES (TRN) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 9.6%. Since the same quarter one year prior, revenues rose by 11.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.98, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
- TRINITY INDUSTRIES's earnings per share declined by 20.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TRINITY INDUSTRIES increased its bottom line by earning $4.20 versus $2.34 in the prior year. This year, the market expects an improvement in earnings ($4.33 versus $4.20).
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Machinery industry and the overall market on the basis of return on equity, TRINITY INDUSTRIES has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- You can view the full analysis from the report here: TRN Ratings Report