Since March 2025, Trinity has been in a holding pattern, posting a small loss of 4.1% while floating around $28.19. The stock also fell short of the S&P 500’s 17.4% gain during that period.
Is now the time to buy Trinity, or should you be careful about including it in your portfolio? See what our analysts have to say in our full research report, it’s free.
Why Do We Think Trinity Will Underperform?
We're sitting this one out for now. Here are three reasons why TRN doesn't excite us and a stock we'd rather own.
1. Revenue Spiraling Downwards
A company’s long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Trinity’s demand was weak and its revenue declined by 2% per year. This was below our standards and signals it’s a low quality business.
2. Revenue Projections Show Stormy Skies Ahead
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Trinity’s revenue to drop by 18.5%, a decrease from its 2% annualized declines for the past five years. This projection doesn't excite us and indicates its products and services will face some demand challenges.
3. Free Cash Flow Margin Dropping
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.
As you can see below, Trinity’s margin dropped by 9.3 percentage points over the last five years. Almost any movement in the wrong direction is undesirable because it is already burning cash. If the trend continues, it could signal it’s becoming a more capital-intensive business. Trinity’s free cash flow margin for the trailing 12 months was negative 9.6%.
Final Judgment
Trinity doesn’t pass our quality test. With its shares lagging the market recently, the stock trades at 6.2× forward EV-to-EBITDA (or $28.19 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. There are more exciting stocks to buy at the moment. We’d recommend looking at the Amazon and PayPal of Latin America.
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