TGH - Textainer Would Quickly Feel the Sting of a Shipping Slowdown in a Recession
2023-05-06 09:30:00 ET
Textainer (NYSE: TGH) helps the world conduct business by buying and leasing out giant steel boxes. The company's shipping containers are vital to getting products from where they are made to where they are used. That's the positive view of the story, but investors looking at the stock following its recent 20% dividend increase should tread with caution. Here's why.
It isn't hard to understand what Textainer does. It buys shipping containers and then leases them to shipping lines so they can safely move products around the world. Textainer basically uses debt to buy the containers, so its profits are driven by the difference between its financing costs and the rates it charges shippers.
This is the basic model for all leasing companies, which is a very big business that spans from shipping containers all the way up to airplanes.
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Textainer Would Quickly Feel the Sting of a Shipping Slowdown in a Recession