$TRTN – strong buy after knocking the cover off Q3 earnings

Triton – a shipping container leasing company – reported Q3 earnings this AM. Readers might not be familiar with Triton, so a quick overview:

  • Triton makes money from buying shipping containers from OEMs and leasing them to shipping lines. At any given point in time, they usually have 90%+ of their containers leased out, a metric they refer to as their utilization rate (was 97.1% this last quarter, historically has been mid to high 90s)
  • Containers – those big metallic boxes you often see at ports or even on trucks on the highway – are usually leased by shippers rather than bought since shipping is a debt-intensive, low margin business where purchasing containers would be financially burdensome
  • Triton when it gets containers back from lease also sells them on the secondary market, often for gains over depreciated value

Onto the quarter. The company increased their dividend by 10% and posted adjusted EPS of $1.14, 32.6% above last quarter. How is this possible for a company that seems reliant on world trade? Well, the silent economic recovery continues, and container port throughput is now exceeding pre-pandemic levels. From Triton’s deck:…

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