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TriMas (TRS) Stock Down 16% In a Year: Is Revival Likely?
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TriMas Corporation’s (TRS - Free Report) shares have lost 16% in a year compared with the industry’s 3.8% decline. The company has been witnessing weakness in packaging demand, as customers have been delaying orders and rebalancing their inventories amid the inflationary environment. Escalating raw material costs, supply-chain headwinds and labor shortages have also been impacting its results.
In the past 30 days, TRS’ earnings estimates for the ongoing quarter and year have gone down by 45% and 35%, respectively. Earnings estimates for 2023 are now pegged at $2.04 per share, indicating a year-over-year decline of 3.8%.
TriMas currently carries a Zacks Rank #4 (Sell).
Image Source: Zacks Investment Research
Factors Hurting the Stock
TriMas’ packaging segment has been bearing the brunt of weak demand as several of its customers became cautious regarding their spending and rebalanced their inventories. This was mainly due to the persisting inflationary pressure. Customer spending has been weak in Europe as well. TRS anticipates some demand recovery this year as customers continue to work through high inventory levels. It also assumes a less favorable product sales mix related to acquisitions in the near term. TriMas anticipates the Packaging segment's year-over-year sales to grow 4-10% in 2023. The segment's operating margin is projected at around 17-19%.
TriMas’ largest raw material purchases are for resins (polypropylene and polyethylene), steel, aluminum and other oil and metal-based purchased components. It has also been burdened with higher wage rates and freight costs. Supply-chain headwinds and labor shortages have also been impacting the company's results.
TriMas plans to counter the impact of higher commodity costs and tariffs through commercial pricing adjustments, looking for alternate suppliers and other means. However, given the sluggish nature of the commercial pricing mechanisms, margin pressure will persist until resin costs stabilize or decline for several consecutive months.
Is a Rebound Possible?
TriMas is expected to deliver strong performances in the Specialty Products and Aerospace segments, which will help counter the weakness in the Packaging segment.
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. It is also seeing increased sales of engines, compressors and replacement parts for stationary power generation units and applications for natural gas and crude oil extraction as a result of higher crude and natural gas pricing and increased oil-field activity in North America. The Specialty Products segment's sales are likely to grow 10-20% on a year-over-year basis in 2023. The segment's operating margin is guided at 17-19%. The current backlog and near-term order intake for steel cylinders remain at high levels.
The order intake and backlog remain strong within TriMas Aerospace. The company expects organic sales growth to accelerate in 2023. The production challenges experienced earlier will likely begin to ease on account of improved manufacturing efficiencies. The Aerospace team begun initial low-rate production of components for the new Boeing T-7A Trainer Jet in the fourth quarter of 2022. Boeing’s T-7A Red Hawk is an all-new advanced pilot training system for the U.S. Air Force. The Aerospace segment's sales are projected to grow 25-30% year over year in 2023 and the operating margin is expected between 5% and 8%. The Weldmac acquisition is expected to contribute to the segment’s growth this year.
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. Its strong product and process innovation will sustain long-term growth.
OI Glass has an average trailing four-quarter earnings surprise of 16.4%. The Zacks Consensus Estimate for OI’s 2023 earnings is pegged at $2.57 per share. This indicates an 11.7% increase from the prior-year reported figure. The consensus estimate for 2023 earnings has moved 16% north in the past 60 days. OI’s shares gained 70.2% in the last year.
Tenaris has an average trailing four-quarter earnings surprise of 11.5%. The Zacks Consensus Estimate for TS’ 2023 earnings is pegged at $6.04 per share. This indicates a 39.5% increase from the prior-year reported figure. The consensus estimate for 2023 earnings has moved north by 17% in the past 60 days. Its shares gained 3.8% in the last year.
The Zacks Consensus Estimate for Illinois Tool Works’ fiscal 2023 earnings per share is pegged at $9.61, suggesting an increase of 4.8% from that reported in the last year. The consensus estimate for fiscal 2023 earnings moved 4% upward in the last 60 days. ITW has a trailing four-quarter average earnings surprise of 0.9%. Its shares gained 9% in the last year.
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TriMas (TRS) Stock Down 16% In a Year: Is Revival Likely?
TriMas Corporation’s (TRS - Free Report) shares have lost 16% in a year compared with the industry’s 3.8% decline. The company has been witnessing weakness in packaging demand, as customers have been delaying orders and rebalancing their inventories amid the inflationary environment. Escalating raw material costs, supply-chain headwinds and labor shortages have also been impacting its results.
In the past 30 days, TRS’ earnings estimates for the ongoing quarter and year have gone down by 45% and 35%, respectively. Earnings estimates for 2023 are now pegged at $2.04 per share, indicating a year-over-year decline of 3.8%.
TriMas currently carries a Zacks Rank #4 (Sell).
Image Source: Zacks Investment Research
Factors Hurting the Stock
TriMas’ packaging segment has been bearing the brunt of weak demand as several of its customers became cautious regarding their spending and rebalanced their inventories. This was mainly due to the persisting inflationary pressure. Customer spending has been weak in Europe as well. TRS anticipates some demand recovery this year as customers continue to work through high inventory levels. It also assumes a less favorable product sales mix related to acquisitions in the near term. TriMas anticipates the Packaging segment's year-over-year sales to grow 4-10% in 2023. The segment's operating margin is projected at around 17-19%.
TriMas’ largest raw material purchases are for resins (polypropylene and polyethylene), steel, aluminum and other oil and metal-based purchased components. It has also been burdened with higher wage rates and freight costs. Supply-chain headwinds and labor shortages have also been impacting the company's results.
TriMas plans to counter the impact of higher commodity costs and tariffs through commercial pricing adjustments, looking for alternate suppliers and other means. However, given the sluggish nature of the commercial pricing mechanisms, margin pressure will persist until resin costs stabilize or decline for several consecutive months.
Is a Rebound Possible?
TriMas is expected to deliver strong performances in the Specialty Products and Aerospace segments, which will help counter the weakness in the Packaging segment.
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. It is also seeing increased sales of engines, compressors and replacement parts for stationary power generation units and applications for natural gas and crude oil extraction as a result of higher crude and natural gas pricing and increased oil-field activity in North America. The Specialty Products segment's sales are likely to grow 10-20% on a year-over-year basis in 2023. The segment's operating margin is guided at 17-19%. The current backlog and near-term order intake for steel cylinders remain at high levels.
The order intake and backlog remain strong within TriMas Aerospace. The company expects organic sales growth to accelerate in 2023. The production challenges experienced earlier will likely begin to ease on account of improved manufacturing efficiencies. The Aerospace team begun initial low-rate production of components for the new Boeing T-7A Trainer Jet in the fourth quarter of 2022. Boeing’s T-7A Red Hawk is an all-new advanced pilot training system for the U.S. Air Force. The Aerospace segment's sales are projected to grow 25-30% year over year in 2023 and the operating margin is expected between 5% and 8%. The Weldmac acquisition is expected to contribute to the segment’s growth this year.
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. Its strong product and process innovation will sustain long-term growth.
Stocks to Consider
Some top-ranked stocks from the Industrial Products sector are OI Glass (OI - Free Report) , Tenaris (TS - Free Report) and Illinois Tool Works (ITW - Free Report) . OI and TS sport a Zacks Rank #1 (Strong Buy) at present, and ITW has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
OI Glass has an average trailing four-quarter earnings surprise of 16.4%. The Zacks Consensus Estimate for OI’s 2023 earnings is pegged at $2.57 per share. This indicates an 11.7% increase from the prior-year reported figure. The consensus estimate for 2023 earnings has moved 16% north in the past 60 days. OI’s shares gained 70.2% in the last year.
Tenaris has an average trailing four-quarter earnings surprise of 11.5%. The Zacks Consensus Estimate for TS’ 2023 earnings is pegged at $6.04 per share. This indicates a 39.5% increase from the prior-year reported figure. The consensus estimate for 2023 earnings has moved north by 17% in the past 60 days. Its shares gained 3.8% in the last year.
The Zacks Consensus Estimate for Illinois Tool Works’ fiscal 2023 earnings per share is pegged at $9.61, suggesting an increase of 4.8% from that reported in the last year. The consensus estimate for fiscal 2023 earnings moved 4% upward in the last 60 days. ITW has a trailing four-quarter average earnings surprise of 0.9%. Its shares gained 9% in the last year.