TOP 100 TRANSPORTATION AND LOGISTICS SITES
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| Why Trinity Industries Is Undervalued Jeff Borack submits:Trinity Industries (TRN) is undervalued for two reasons: 1) Short-term earnings expectations from analysts and management are very low due to macroeconomic concerns justified by a significantly diminished backlog of orders and new order inflow. However, long-term earnings expectations are still strong based on industry fundamentals and independent forecasts for product demand. Even taking the most pessimistic scenario that I can concoct, TRN appears undervalued by over 50% at a present share price of around $10. 2) Earnings have been systematically understated due to the method of accounting for transfer of assets between subsidiaries. If we separate the railcar leasing division from TRN, the combined pro-forma earnings would have been between 10-30% higher over the past few years. This difference should continue as long as TRN builds its railcar leasing fleet, but if we froze the business today and simply let the assets generate revenue, shareholders would reap the benefits for up to 30 years.Complete Story » seekingalpha.com |
Auto Supplier Shock Continues to Spread. Now It's TRW's Turn Tyler Durden submits: Last week it was Visteon (VC), Monday it was Lear (LEA), yesterday it was TRW. The auto supplier whose secured credit facility has been on an unprecedented tear recently, filed an 8-K yesterday announcing it will likely breach covenants, and not some time in 2013 (the same year the S&P is using for its fwd multiple calculation), but Q2! In other words, they have a mere 30 days before TRW will be the next auto supplier casualty. It is interesting that TRW management waited so long, before a) announcing just how bad things are and b) taking proactive steps to fix things. From the 8-K: On June 2, 2009, TRW Automotive Holdings Corp. (the “Company”) announced that it has initiated the process with its bank group to amend its primary credit facility. In light of the current industry conditions, it is unlikely that the Company will be in compliance with the financial covenants of its existing credit facility at the end of the second quarter of 2009 and, therefore, is seeking to amend certain terms of its primary credit agreement to position the Company for future covenant compliance through the current downturn. The Company expects to complete the amendment process prior to the end of the second quarter 2009.Complete Story » seekingalpha.com |
Union Pacific Q2 2009 Earnings Call Transcript Union Pacific (UNP)Q2 2009 Earnings CallJuly 23, 2009 8:45 amComplete Story » seekingalpha.com |
Rail Industry: Why I'm Interested in Regionals James Cullen submits: After Buffett’s investments in a handful of major railroads – Union Pacific (UNP), Norfolk Southern (NSC), and most notably Burlington Northern Santa Fe (BNI) – the industry garnered plenty of attention. The attractive industry dynamics and a myopic focus on the major players makes me interested in the small number of publicly traded regional railroads – among them Kansas City Southern (KSU) and Genesee & Wyoming (GWR).Why railroads? Foremost, it’s an industry with significant tangible barriers to entry, and it provides a vital economic service. Although fixed asset investment is substantial, I also believe that the general consensus underestimates the variability of the typical railroad’s cost structure – yes, there’s operating leverage there, but there is also room to reduce headcount as unit volumes decline. Below is a graph of quarter-over-quarter revenue growth compared to QoQ operating expense growth for two major carriers (Norfolk Southern and CSX), one larger regional (Kansas City Southern) and the short-line amalgamation G&W.Complete Story » seekingalpha.com |
Lear Exits Bankruptcy Protection Wall Street Strategies submits:In a time when government bailouts have become commonplace, an act of true capitalism has found its way back. There is no question that the auto industry was completely decimated by the economic crisis. Seeing as the industry is pivotal to the U.S. economy, the auto makers got government handouts in the form of direct cash infusions (some for equity) while others saw government incentive spending which boosted sales. Following the food chain for the auto industry, one could argue that the cash for clunkers program helped auto parts suppliers too, but it was the industry’s only form of “bailout.” The Auto Task Force and President Obama denied the auto parts suppliers industry its own bailout, however, the government did lend a helping hand guaranteeing many of the owed payments from the auto makers. So without direct government aid, many auto parts suppliers were forced into bankruptcy, and if history has showed us anything, it would be a long arduous trip back out of bankruptcy for these companies. More recent examples are the problems with Dana Corporation (DAN) and Delphi, which are still struggling to emerge from bankruptcy. Complete Story » seekingalpha.com |