Head to Head Review: Trinity Industries (NYSE:TRN) vs. Herc (NYSE:HRI)

Herc (NYSE:HRI) and Trinity Industries (NYSE:TRN) are both mid-cap transportation companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, profitability, analyst recommendations, valuation, risk, dividends and institutional ownership.

Insider and Institutional Ownership

93.1% of Herc shares are owned by institutional investors. Comparatively, 86.6% of Trinity Industries shares are owned by institutional investors. 1.3% of Herc shares are owned by insiders. Comparatively, 2.0% of Trinity Industries shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Herc and Trinity Industries”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Herc	$3.57 billion	1.01	$211.00 million	$4.49	28.13
Trinity Industries	$3.08 billion	0.71	$138.40 million	$1.62	16.44

Herc has higher revenue and earnings than Trinity Industries. Trinity Industries is trading at a lower price-to-earnings ratio than Herc, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Herc and Trinity Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Herc	3.53%	24.10%	4.30%
Trinity Industries	4.79%	11.47%	1.69%

Risk & Volatility

Herc has a beta of 1.88, suggesting that its share price is 88% more volatile than the S&P 500. Comparatively, Trinity Industries has a beta of 1.46, suggesting that its share price is 46% more volatile than the S&P 500.

Dividends

Herc pays an annual dividend of $2.80 per share and has a dividend yield of 2.2%. Trinity Industries pays an annual dividend of $1.20 per share and has a dividend yield of 4.5%. Herc pays out 62.4% of its earnings in the form of a dividend. Trinity Industries pays out 74.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Herc has increased its dividend for 2 consecutive years and Trinity Industries has increased its dividend for 16 consecutive years. Trinity Industries is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current recommendations for Herc and Trinity Industries, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Herc	0	2	3	0	2.60
Trinity Industries	0	2	0	0	2.00

Herc presently has a consensus target price of $139.20, suggesting a potential upside of 10.22%. Trinity Industries has a consensus target price of $27.50, suggesting a potential upside of 3.27%. Given Herc’s stronger consensus rating and higher probable upside, research analysts clearly believe Herc is more favorable than Trinity Industries.

Summary

Herc beats Trinity Industries on 13 of the 17 factors compared between the two stocks.

About Herc

Herc Holdings Inc., together with its subsidiaries, operates as an equipment rental supplier. It rents aerial, earthmoving, material handling, trucks and trailers, air compressors, compaction, and lighting equipment, as well as generators, and safety supplies and expendables; and provides ProSolutions, an industry specific solution based services, such as pumping solutions, power generation, climate control, remediation and restoration, and studio and production equipment. The company also sells used equipment and contractor supplies, such as construction consumables, tools, small equipment, and safety supplies; provides repair, maintenance, equipment management, and safety training services, as well as offers ancillary services, such as equipment transport, rental protection, cleaning, refueling, and labor. It serves non-residential and residential construction, specialty trade, restoration, remediation and environment, and facility maintenance contractors; industrial manufacturing industries, including automotive and aerospace, power, metals and mining, agriculture, pulp, paper and wood, food and beverage, and refineries and petrochemical industries; infrastructure and government sectors; and commercial and retail service, hospitality, healthcare, recreation, entertainment production, and special event management customers through its sales team, industry catalogs, as well as through participation and sponsorship of industry events, trade shows, and Internet. As of December 31, 2017, it operated approximately 275 locations in the United States, Canada, China, the United Kingdom, Saudi Arabia, and Qatar. Herc Holdings Inc. is based in Bonita Springs, Florida.

About Trinity Industries

Trinity Industries, Inc. provides rail transportation products and services under the TrinityRail name in North America. It operates in two segments, Railcar Leasing and Management Services Group, and Rail Products Group. The Railcar Leasing and Management Services Group segment leases freight and tank railcars; originates and manages railcar leases for third-party investors; and provides fleet maintenance and management services. As of December 31, 2023, it had a fleet of 109,295 railcars. This segment serves industrial shipper and railroad companies operating in agriculture, construction and metals, consumer products, energy, and refined products and chemicals markets. The Rail Products Group segment manufactures freight and tank railcars for transporting various liquids, gases, and dry cargo; and offers railcar maintenance and modification services. This segment serves railroads, leasing companies, and industrial shippers of products in the agriculture, construction and metals, consumer products, energy, and refined products and chemicals markets. It sells or leases products and services through its own sales personnel and independent sales representatives. The company was incorporated in 1933 and is headquartered in Dallas, Texas.