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TriMas (TRS) Hits 52-Week High: What's Driving the Upside?

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Shares of TriMas Corporation (TRS - Free Report) scaled a fresh 52-week high of $32.05 during the Dec 24 trading session, before retracting to close at $32.04. Forecast-topping third-quarter 2020 results, pandemic-driven escalating demand for dispensing pumps and closure products, and personal and home care products, and continuous focus on acquisitions have contributed to this rally.

Share Price Performance

Shares of TriMas have gained 40.7% over the past three months, outperforming the industry’s growth of 36%.

Q3 Earnings & Sales Beat: TriMas reported adjusted earnings of 43 cents per share in the third quarter, beating the Zacks Consensus Estimate of 39 cents. The bottom line improved 19% year over year. The company’s revenues of $199 million also surpassed the consensus mark of $194 million and increased 6% year over year. Record sales in the Packaging segment and contribution from acquisitions have led to top-line growth.

Notably, the company has a trailing four-quarter average earnings surprise of 8.45%.

Driving Factors

The company’s Packaging segment has been benefiting from high demand for dispensing pumps and closure products sold into applications that help fight the spread of germs or are used in cleaning amid the pandemic. Backed by this momentum, the Packaging segment’s sales are expected to increase 21-23% year over year in 2020. TriMas is also witnessing escalating demand for personal care and home care products, and planning to increase capacity globally to meet customer requirements.

Overall sales for the company in 2020 are expected to increase 4-6% year over year. TriMas anticipates 2020 adjusted earnings per share between $1.45 and $1.50. In the wake of the uncertain market conditions amid the coronavirus pandemic, the company has taken steps to lower costs, which in turn will drive margins.

TriMas also acquired Plastic Srl and Taplast in 2019, which augmented its product offerings and expanded its geographic presence while accelerating growth of the packaging platform. In February 2020, TriMas acquired RSA Engineered Products, which expanded its aerospace presence into environmental control system applications, the defense and business jet markets, and the aerospace aftermarket.

In April, the company acquired the Rapak brand, including certain bag-in-box product lines and assets, from Liqui-Box. The Rapak brand name, and bag-in-box applications and products will improve its packaging portfolio. Recently, TriMas acquired Affaba & Ferrari, Italy-based designer and manufacturer of engineered caps and closures for food and beverage, and industrial applications. This buyout will aid the company to strengthen its existing food and beverage, and industrial product lines, while offering new product applications for consumer packaged goods and top-grade industrial customers.

In fact, these buyouts are expected to contribute to the company’s top line with more than 80% of its sales stemming from Packaging and Aerospace markets. TriMas has a robust pipeline of potential M&A in the Packaging and Aerospace segments.

The company will continue to focus on leveraging the TriMas Business Model, which was implemented in late 2016 to improve the management and performance of its businesses. Its innovative solutions through product, process or service, and extensive resources will help enhance business performance. The company also has a strong pipeline of both product and process innovation that will sustain long-term growth, and position it to capitalize on market opportunities and minimize market disruptions.

Positive Growth Projections

The Zacks Consensus Estimate for the company’s earnings for the current year is pegged at $1.51 per share, suggesting year-over-year growth of 4.1%. The same for 2021 is pegged at $1.84 per share, indicating year-over-year growth of 21.8%.

Zacks Rank & Other Stocks to Consider

TriMas currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the Industrial Products sector include AGCO Corporation (AGCO - Free Report) , Avery Dennison Corporation (AVY - Free Report) and Ball Corporation (BLL - Free Report) . While AGCO flaunts a Zacks Rank #1 (Strong Buy), Avery Dennison and Ball Corp carry a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

AGCO has an expected earnings growth rate of 15.5% for 2020. The stock has appreciated 42% in three months’ time.

Avery Dennison has an estimated earnings growth rate of 5% for the ongoing year. Shares of the company have gained 23.1% in the past three months.

Ball Corp has a projected earnings growth rate of 16.2% for the current year. Over the past three months, the company’s shares have gained 12.1%.

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