Triangle Industries Ltd (TSXV:TIA.H), a CADCA$273.14K small-cap, is a land transport company operating in an industry which is closely linked to the wider economic growth, with demand rising and falling with the broader economy. Transport analysts are forecasting for the whole industry, an extremely robust growth of 58.25% in the upcoming year , and a whopping triple-digit earnings growth over the next couple of years. Not surprisingly, this rate is more than double the growth rate of the Canadian stock market as a whole. Today, I will analyse the industry outlook, and also determine whether TIA.H is a laggard or leader relative to its transportation sector peers. See our latest analysis for TIA.H

What’s the catalyst for TIA.H’s sector growth?

Diesel prices were at their lowest level at the start of the decade, largely in response to low prices for crude oil. This positively impacted transportation companies, who saw higher margins as a result of lower cost. Over the past year, the industry saw growth of 9.95%, beating the Canadian market growth of 8.26%. TIA.H lags the pack with its sustained negative earnings over the past couple of years. The company’s outlook seems uncertain, with a lack of analyst coverage, which doesn’t boost our confidence in the stock. This lack of growth and transparency means TIA.H may be trading cheaper than its peers.

Is TIA.H and the sector relatively cheap?

The land transport industry is trading at a PE ratio of 33x, higher than the rest of the Canadian stock market PE of 17x. This means the industry, on average, is relatively overvalued compared to the wider market. However, the industry returned a lower 6.09% compared to the market’s 9.62%, which may be indicative of past headwinds. Since TIA.H’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge TIA.H’s value is to assume the stock should be relatively in-line with its industry.

What this means for you:

Are you a shareholder? TIA.H recently delivered an industry-beating growth rate in earnings, which is a positive for shareholders. If you’re bullish on the stock and well-diversified by industry, you may decide to hold onto TIA.H as part of your portfolio. However, if you’re relatively concentrated in land transport, you may want to value TIA.H based on its cash flows to determine if it is overpriced based on its current growth outlook.

Are you a potential investor? If TIA.H has been on your watchlist for a while, now may be the time to enter into the stock, if you like its ability to deliver growth and are not highly concentrated in the land transport industry. Before you make a decision on the stock, take a look at TIA.H’s cash flows and assess whether the stock is trading at a fair price.

For a deeper dive into Triangle Industries’s stock, take a look at the company’s latest free analysis report to find out more on its financial health and other fundamentals. Interested in other transportation stocks instead? Use our free playform to see my list of over 100 other transportation companies trading on the market.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.