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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (55252)	4/27/2015 2:04:33 PM
From: Mattyice	Read Replies (1) \| Respond to of 78740

I am not sure if I am missing something here - but the stock is down 20% in the last few days. This from the WSJ - Declining output from shale-oil fields cut demand for key types of railroad cars, new data shows, the latest sign of the fallout from lower oil prices. “We’re hearing that the small cube cars are being parked,” said Eric Starks, president of logistics consulting firm FTR Associates. “It’s purely because of the price of oil.” Contra from Trinity VP - “We see a broadening demand for our railcars,” Stephen Menzies,vice president in charge Trinity’s railcar business, said during a call with analysts. “We have received a fair number of tank car orders beyond those serving the crude-oil markets.” Trinity’s first-quarter results easily topped expectations and the company raised its profit guidance for the year. Nevertheless, investors Friday dumped its shares, driving the stock down 14% to $28.70 ------ They have shown the ability to increase book value/owners earnings and earn decent returns on invested capital in a capital intensive business - but the other side of me is this has been built on the backs of a debt fueled oil boom - definitely on the fence here.

To: E_K_S who wrote (55252)	4/27/2015 3:46:24 PM
From: geoffrey Wren	1 Recommendation Recommended By E_K_S Respond to of 78740

TRN sure looks good for the raw numbers, but this lawsuit makes me pass. According to The New York Times, the jury awarded $175 million in the case against TRN. However, that amount will be tripled to $525 million under federal law. Of course there will be appeals that go for years. There are also other penalties that could go up to $184 million. Lawsuit has to do with modification to guardrail design that saved TRN but a little, but supposedly tripled the risk of being killed if the collision occurred at the end of the guardrail. The expense not determined yet is the expense to be incurred if TRN is forced to modify all the guardrails with this defect. There are already class-action suits going. The 10K indicates exposure cannot be quantified, but may be substantial. Multi-year distraction, attorney fees, potentially large judgments against this company with a market cap of $4 billion. As to insurance coverage, I tend to doubt insurance would cover these expenses, although maybe it would. For investment purposes, I would assume not. Better to be pleasantly surprised than unpleasantly surprised when that decision is made.