Hweb- TRTN
This sector has been in a tug of war(to the downside) with investors ever since CAI CEO warned of headwinds going forward. Here is the good and bad out of a recent article on the group...
Textainer said that it expected its financial results to improve throughout this year. CEO Philip Brewer stated that "we enter 2018 with great momentum and the support of a favorable market environment." Because of that, he expects the company's "performance in the first quarter of 2018 to be better than the fourth quarter of 2017, with increasing profitability as we move into 2018." Triton International's CEO Brian Sondey echoed those sentiments, expecting that "market conditions will remain favorable in 2018." In fact, Triton's CEO said:
The first quarter is usually our weakest quarter of the year ... [and] we usually experience a sequential decrease in profitability from the fourth to the first quarter. However ... we expect our Adjusted pre-tax income will increase slightly from the fourth quarter of 2017 to the first quarter of 2018.
Furthermore, he thought that earnings would "increase sequentially throughout the year if market conditions remain favorable." CAI International, likewise, expects "2018 to be a very strong demand year for containers as the world economy continues to expand and lessors continue to operate with high utilization," according to CEO Victor Garcia.
But while these companies expect earnings to improve this year, they tempered that bullishness by noting some headwinds on the horizon. CAI International's CEO, for example, pointed out:
Offsetting the impact of strong demand in the coming year is the expectation of increased competition from container equipment lessors who are active in the market, lower expected gain on sale of equipment due to a lack of equipment availability, and higher expected interest costs.
Textainer's CEO, likewise, cautioned that earnings on new leases would be "slightly moderated as competition increases" due to the improving market conditions.
So Hweb, what should we believe ? I mean how can the companies say they'll do so well, but at the same time give these warnings. Investors seem to be trying to read between the lines, and don't trust the guidance.
