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Triumph Group Prospects Bright, Price Volatility a Drag
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On Dec 6, we issued an updated research report on Berwyn, PA-based – Triumph Group Inc. (TGI - Free Report) – which offers a variety of products and services to the aerospace industry. The company serves a wide range of businesses within the aerospace industry, including commercial and regional airlines, air cargo carriers, as well as original equipment manufacturers (OEMs) of commercial, regional, business and military aircraft.
Triumph Group is committed toward enhancing shareholders’ value through a systematic share repurchase program and payment of dividends at regular intervals. As of Sep 30, 2016, the company had the authority to repurchase about 2.3 million shares. The company paid $7.9 million in dividends in fiscal 2016 and $4 million during the six months ending the second quarter of fiscal 2017.
Rising traffic in the aviation industry, attributable to higher business activities, is expected to accelerate maintenance spending on aircraft and consequently drive the aftermarket services growth cycle. This in turn will boost Triumph Group’s sales. Moreover, the company’s focus on execution and delivery improvement continues to boost client confidence.
Further, Triumph Group's planned divestitures of non-core operating companies are approaching completion in fiscal 2017 or early fiscal 2018. Across its four business units, the company’s pipeline of addressable opportunities increased from $14 billion in the first quarter to over $17 billion in the second, reflecting success in the strategic planning process management had initiated in February.
On the flip side, Boeing cancelled previous plans to return to a production rate of 1.0 aircraft per month for 747 beginning in 2019 Triumph Group, which provides services to Boeing, is already assessing the impact of the announced 747-8 production cut.
Moreover, Triumph Group’s stock has gained about 9.86% in the last one year, below the Zacks Categorized Aerospace/Defense industry’s 82.85% over the same time frame. The primary reason for this underperformance is poor organic sales growth along with volatility in energy and commodity prices. Moreover, the company missed the Zacks Consensus Estimate in the four trailing quarters, with an average positive surprise of 8.48%. The earnings growth estimate of the company for the next fiscal is pegged at -14.53%.
Zacks Rank & Key Picks
Triumph Group currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the aerospace and defense space include Engility Holdings, Inc. , Northrop Grumman Corporation (NOC - Free Report) and Lockheed Martin Corporation (LMT - Free Report) .
On an average, Engility posted a positive earnings surprise of 23.19% in the trailing four quarters. The company’s 2016 estimates have risen 13.3% over the last 60 days. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Northrop sports a Zacks Rank #1 as well. The company’s 2016 estimates have increased by 6% over the last 60 days. On an average, the company delivered a positive earnings surprise of 8.3% in the trailing four quarters.
Lockheed Martin currently carries a Zacks Rank #2 (Buy). The company’s 2016 estimates have risen 3.8% over the last 60 days. On an average, the company delivered a positive earnings surprise of 11.4% in the trailing four quarters.
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Triumph Group Prospects Bright, Price Volatility a Drag
On Dec 6, we issued an updated research report on Berwyn, PA-based – Triumph Group Inc. (TGI - Free Report) – which offers a variety of products and services to the aerospace industry. The company serves a wide range of businesses within the aerospace industry, including commercial and regional airlines, air cargo carriers, as well as original equipment manufacturers (OEMs) of commercial, regional, business and military aircraft.
Triumph Group is committed toward enhancing shareholders’ value through a systematic share repurchase program and payment of dividends at regular intervals. As of Sep 30, 2016, the company had the authority to repurchase about 2.3 million shares. The company paid $7.9 million in dividends in fiscal 2016 and $4 million during the six months ending the second quarter of fiscal 2017.
Rising traffic in the aviation industry, attributable to higher business activities, is expected to accelerate maintenance spending on aircraft and consequently drive the aftermarket services growth cycle. This in turn will boost Triumph Group’s sales. Moreover, the company’s focus on execution and delivery improvement continues to boost client confidence.
Further, Triumph Group's planned divestitures of non-core operating companies are approaching completion in fiscal 2017 or early fiscal 2018. Across its four business units, the company’s pipeline of addressable opportunities increased from $14 billion in the first quarter to over $17 billion in the second, reflecting success in the strategic planning process management had initiated in February.
On the flip side, Boeing cancelled previous plans to return to a production rate of 1.0 aircraft per month for 747 beginning in 2019 Triumph Group, which provides services to Boeing, is already assessing the impact of the announced 747-8 production cut.
Moreover, Triumph Group’s stock has gained about 9.86% in the last one year, below the Zacks Categorized Aerospace/Defense industry’s 82.85% over the same time frame. The primary reason for this underperformance is poor organic sales growth along with volatility in energy and commodity prices. Moreover, the company missed the Zacks Consensus Estimate in the four trailing quarters, with an average positive surprise of 8.48%. The earnings growth estimate of the company for the next fiscal is pegged at -14.53%.
Zacks Rank & Key Picks
Triumph Group currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the aerospace and defense space include Engility Holdings, Inc. , Northrop Grumman Corporation (NOC - Free Report) and Lockheed Martin Corporation (LMT - Free Report) .
On an average, Engility posted a positive earnings surprise of 23.19% in the trailing four quarters. The company’s 2016 estimates have risen 13.3% over the last 60 days. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Northrop sports a Zacks Rank #1 as well. The company’s 2016 estimates have increased by 6% over the last 60 days. On an average, the company delivered a positive earnings surprise of 8.3% in the trailing four quarters.
Lockheed Martin currently carries a Zacks Rank #2 (Buy). The company’s 2016 estimates have risen 3.8% over the last 60 days. On an average, the company delivered a positive earnings surprise of 11.4% in the trailing four quarters.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>