Triumph Group

by Zacks Equity Research

November 23, 2012 |
TGI

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Triumph Group, Inc. (TGI - Analyst Report) reached a new 52-week high of $67.39 on November 2, soon after releasing solid fiscal second quarter results that included a raised EPS guidance. This Zacks #1 Rank (Strong Buy) supplier of aerospace/defense products and services is an attractive option for value investors given its price-to-earnings (P/E) ratio of 10.7.

Driving Catalyst

On October 30, Triumph Group announced fiscal second quarter earnings per share of $1.57, topping the Zacks Consensus Estimate by 19% and improving 36.5% from last year. This marked the sixth straight quarter with a positive earnings surprise and the 10 beat in the last 11 quarters.

Higher revenue across its segments, operating income growth and margin expansion drove the quarter’s results, while a steady backlog, stronger balance sheet and significant cash flow generation were additional perks.

Based on the solid quarterly performance, the company raised its earnings per share guidance for fiscal 2013 to approximately $5.95 per diluted share from its earlier expectation of approximately $5.65, excluding integration costs. It reaffirmed the revenue guidance of $3.5 billion to $3.7 billion.

Earnings Estimates Move Higher

Over the last 30 days, the Zacks Consensus Estimate for fiscal 2013 advanced 3.3% to $5.97 as 6 of 8 total estimates were revised higher.

For fiscal 2014, the Zacks Consensus Estimate gained 4.2% to $6.66 as 8 of 10 estimates were boosted. These outlooks represent year-over-year earnings growth of 19.1% for fiscal 2013 and 11.7% for fiscal 2014.

A Value Play

Triumph Group currently trades at a forward P/E multiple of 10.7x, a slight premium of 5.0% from the peer group average of 10.1x. In addition to a P/E multiple, the stock also trades at a P/S ratio of 0.9 and at a P/B ratio of just 1.6. A P/E ratio below 15.0, a P/B ratio under 3.0 and a P/S ratio lower than 1.0 generally indicate value.

As can be observed from the chart below, the Zacks Consensus Estimates are rising for the years ahead, pointing to healthy and bright future growth prospects.

Triumph Group Inc. is headquartered in Wayne, Pennsylvania, and was founded in 1993. The company operates in the aerospace industry and provides various products and services to its vast client base, including commercial and regional airlines, air cargo carriers, as well as original equipment manufacturers (OEMs) of commercial, regional, business and military aircraft. Currently, the company has a market capitalization of approximately $3.2 billion.


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