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Why Is Triumph Group (TGI) Up 24.4% Since Last Earnings Report?

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It has been about a month since the last earnings report for Triumph Group (TGI - Free Report) . Shares have added about 24.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Triumph Group due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Triumph Group Beats on Q3 Earnings, Sales Down Y/Y

Triumph Group Inc.’s adjusted earnings in third-quarter fiscal 2021 (ended Dec 31, 2020) were 9 cents per share, which surpassed the Zacks Consensus Estimate’s losses of 7 cents. The bottom line however declined 87% from 69 cents recorded in the prior-year quarter.

Including one-time adjustments, the company incurred GAAP loss of $1.30 per share in the fiscal third quarter compared with loss of 26 cents incurred in the year-ago quarter.

Total Sales

Net sales in the quarter under review came in at $426 million, missed the Zacks Consensus Estimate of $445 million by 4.2%. Moreover, the top line declined 39.5% on a year-over-year basis.

After taking divestitures into account, organic sales in the quarter went down 32% year over year driven by planned reductions on sunsetting and transitioned programs, impacts of the COVID-19 pandemic and resulting production rate decreases primarily on commercial programs.

Operational Highlights

In third-quarter fiscal 2021, the company generated adjusted operating income of $37.1 million, which declined 40.5% from the year-ago quarter’s figure. Adjusted operating margin of 8.9% declined 20 basis points from 9.1% in the third-quarter of fiscal 2020.

Interest expenses and other amounted to $44.9 million, up 35.2% from $33.2 million in the prior-year quarter.

Backlog came in at $2.28 billion, down year over year and on a sequential basis due to divestitures, sunsetting programs and production rate reductions.

Segmental Performance

Aerospace Structures: Segment sales totaled $162.4 million, down 56% from $369 million in the year-ago quarter. The segment reported operating income of $18 million during the third-quarter fiscal 2021.

Systems & Support: Segment sales declined 22.1% year over year to $264.1 million. Operating income was $57.4 million during the third-quarter fiscal 2021.

Financial Position

As of Dec 31, 2020, Triumph Group’s cash and cash equivalents totaled $477.3 million, compared with $485.5 million as of Mar 31, 2020.

Its long-term debt (excluding current portion) amounted to $2.13 billion as of Dec 31, 2020, compared with $1.80 billion as on Mar 31, 2020.

Net cash used in operating activities in the first nine months of fiscal 2021 was $195.9 million, against the net cash generated worth $39.3 million a year ago.

The company’s capital expenditures were $19 million in the first nine months of fiscal 2021 compared with $27.3 million in the prior-year quarter.

Guidance

Triumph Group reaffirmed financial guidance for fiscal 2021. The company continues to expect to generate net sales of $1.8-$1.9 billion. The Zacks Consensus Estimate for revenues of $1.85 billion lies at the mid-point of the guidance.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 125.64% due to these changes.

VGM Scores

At this time, Triumph Group has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Triumph Group has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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