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TriMas (TRS) Stock Declines 29% YTD: Is Revival Likely?
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TriMas Corporation’s (TRS - Free Report) shares have lost 29% so far this year compared with the industry’s decline of 29.3%. Escalating raw material costs for resins, steel, aluminum and other oil and metal-based purchased components are denting the stock’s performance. Additionally, supply-chain headwinds and labor shortages are concerns.
In the past 60 days, TRS’ earnings for the current year have gone down by 13%, with two estimates moving lower. Earnings estimates for 2022 is now pegged at $2.28 per share, indicating year-over-year growth of 1.79%.
Image Source: Zacks Investment Research
Factors Hurting the Stock
TriMas’ largest raw material purchases are for resins (polypropylene and polyethylene), steel, aluminum and other oil and metal-based purchased components. The company has been witnessing higher material costs, primarily for resin-based raw materials and components and for certain types of steel. It has started to experience higher costs for aluminum alloy, nickel, titanium and some types of stainless steel in the Aerospace segment. These material costs have been on an uptrend and are expected to remain so in the current year.
TriMas plans to counter the impact of higher commodity costs and the impacts of tariffs through commercial pricing adjustments, looking for alternate suppliers and other means. However, given the lag nature of the commercial pricing mechanisms, margin pressure will remain until resin costs stabilize or decline for several consecutive months. Supply-chain headwinds and labor shortages might also impact the company's results.
Is Rebound Possible?
TriMas’ Packaging segment, which accounts for around 63% of its sales, manufactures dispensers and closures that are used in applications to help fight the spread of germs, improve personal hygiene, and for home and industrial cleaning and food and beverage, pharmaceutical applications. The segment has been witnessing higher sales growth in these applications. Demand for the segment's dispensing pumps and closure products used in personal care and home care applications continues to benefit from increased awareness regarding hygiene worldwide.
The Specialty Products segment has been witnessing growth in sales on the back of higher demand for steel cylinders and engines and compressors used in construction, heating, ventilation and air conditioning (HVAC) applications. Also, ongoing air travel and commercial jet production recovery will drive growth. New business awards, market recovery and the TFI Aerospace acquisition are aiding the company’s Aerospace segment. Activity in the manufacturing sector has picked up after the COVID-19-induced slowdown, which bodes well for TriMas, given that industrial markets generate around 28% of its sales.
The company anticipates adjusted earnings per share for the current year to be between $2.25 and $2.35. The mid-point of the range indicates year-over-year growth of 3%. Current-year sales growth will be driven by acquisitions, pick-up in industrial demand and benefits from its diversified end markets.
TriMas’ strategy is to accelerate growth through acquisitions, particularly in its Packaging and Aerospace platforms, backed by their growth prospects. The company is committed to restructuring its portfolio and accelerating long-term growth, primarily by focusing on the Packaging and Aerospace segments. Facility consolidation initiatives within these segments will lead to cost savings. Its strong product and process innovation will sustain long-term growth.
Graphic Packaging has an estimated earnings growth rate of 86.8% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 7.6%.
Graphic Packaging pulled off a trailing four-quarter earnings surprise of 7.2%, on average. The company’s shares have appreciated 8% in the past six months.
Myers Industries has an expected earnings growth rate of 67% for 2022. The Zacks Consensus Estimate for the current year’s earnings has moved up 27% in the past 60 days.
MYE has a trailing four-quarter earnings surprise of 20.1%, on average. Myers Industries’ shares have risen 25% over the last six months.
Packaging Corporation has an expected earnings growth rate of 16.2% for 2022. The Zacks Consensus Estimate for the current year’s earnings rose 4.2% in the past 60 days.
PKG has a trailing four-quarter earnings surprise of 19.6%, on average. Packaging Corporation’s shares have risen 16% in the past six months.
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TriMas (TRS) Stock Declines 29% YTD: Is Revival Likely?
TriMas Corporation’s (TRS - Free Report) shares have lost 29% so far this year compared with the industry’s decline of 29.3%. Escalating raw material costs for resins, steel, aluminum and other oil and metal-based purchased components are denting the stock’s performance. Additionally, supply-chain headwinds and labor shortages are concerns.
In the past 60 days, TRS’ earnings for the current year have gone down by 13%, with two estimates moving lower. Earnings estimates for 2022 is now pegged at $2.28 per share, indicating year-over-year growth of 1.79%.
Image Source: Zacks Investment Research
Factors Hurting the Stock
TriMas’ largest raw material purchases are for resins (polypropylene and polyethylene), steel, aluminum and other oil and metal-based purchased components. The company has been witnessing higher material costs, primarily for resin-based raw materials and components and for certain types of steel. It has started to experience higher costs for aluminum alloy, nickel, titanium and some types of stainless steel in the Aerospace segment. These material costs have been on an uptrend and are expected to remain so in the current year.
TriMas plans to counter the impact of higher commodity costs and the impacts of tariffs through commercial pricing adjustments, looking for alternate suppliers and other means. However, given the lag nature of the commercial pricing mechanisms, margin pressure will remain until resin costs stabilize or decline for several consecutive months. Supply-chain headwinds and labor shortages might also impact the company's results.
Is Rebound Possible?
TriMas’ Packaging segment, which accounts for around 63% of its sales, manufactures dispensers and closures that are used in applications to help fight the spread of germs, improve personal hygiene, and for home and industrial cleaning and food and beverage, pharmaceutical applications. The segment has been witnessing higher sales growth in these applications. Demand for the segment's dispensing pumps and closure products used in personal care and home care applications continues to benefit from increased awareness regarding hygiene worldwide.
The Specialty Products segment has been witnessing growth in sales on the back of higher demand for steel cylinders and engines and compressors used in construction, heating, ventilation and air conditioning (HVAC) applications. Also, ongoing air travel and commercial jet production recovery will drive growth. New business awards, market recovery and the TFI Aerospace acquisition are aiding the company’s Aerospace segment. Activity in the manufacturing sector has picked up after the COVID-19-induced slowdown, which bodes well for TriMas, given that industrial markets generate around 28% of its sales.
The company anticipates adjusted earnings per share for the current year to be between $2.25 and $2.35. The mid-point of the range indicates year-over-year growth of 3%. Current-year sales growth will be driven by acquisitions, pick-up in industrial demand and benefits from its diversified end markets.
TriMas’ strategy is to accelerate growth through acquisitions, particularly in its Packaging and Aerospace platforms, backed by their growth prospects. The company is committed to restructuring its portfolio and accelerating long-term growth, primarily by focusing on the Packaging and Aerospace segments. Facility consolidation initiatives within these segments will lead to cost savings. Its strong product and process innovation will sustain long-term growth.
TriMas currently carries a Zacks Rank #4 (Sell).
Stocks to Consider
Some better-ranked stocks in the Industrial Products sector are Graphic Packaging Holding Company (GPK - Free Report) , Myers Industries (MYE - Free Report) and Packaging Corporation of America (PKG - Free Report) , each flaunting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Graphic Packaging has an estimated earnings growth rate of 86.8% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 7.6%.
Graphic Packaging pulled off a trailing four-quarter earnings surprise of 7.2%, on average. The company’s shares have appreciated 8% in the past six months.
Myers Industries has an expected earnings growth rate of 67% for 2022. The Zacks Consensus Estimate for the current year’s earnings has moved up 27% in the past 60 days.
MYE has a trailing four-quarter earnings surprise of 20.1%, on average. Myers Industries’ shares have risen 25% over the last six months.
Packaging Corporation has an expected earnings growth rate of 16.2% for 2022. The Zacks Consensus Estimate for the current year’s earnings rose 4.2% in the past 60 days.
PKG has a trailing four-quarter earnings surprise of 19.6%, on average. Packaging Corporation’s shares have risen 16% in the past six months.