We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
TriMas (TRS) Stock Down 7% in a Year: Will It Bounce Back in 2024?
Read MoreHide Full Article
TriMas Corporation’s (TRS - Free Report) shares have lost 7% in a year against the industry’s 4.5% growth. This mainly reflects the weak performance of its packaging segment due to low demand. The segment’s organic growth has been in the negative territory over the past six quarters. Escalating raw material costs, supply-chain headwinds and labor shortages have also added to the company’s woes.
Weak Packaging Demand Weighs on TriMas
TriMas’ Packaging segment, which accounted for 59% of the company’s sales in 2022, has witnessed a year-over-year decline in its revenues over the past five quarters. Organic growth has been in the red since the second quarter of 2022.
Image Source: Zacks Investment Research
Demand has been weak as several of its customers became cautious regarding their spending amid the persisting inflationary scenario. They have also been rebalancing their inventories.
Although TRS had expected demand to pick up, the same has not yet materialized. TriMas anticipates the Packaging segment's year-over-year sales to decline 8% to 2% in 2023.
Consolidated sales growth is now projected to be 5-10% for 2023, much lower than its previous projection of 10% to 15%. TriMas expects adjusted earnings per share in the range of $1.80 to $1.95. The midpoint indicates a year-over-year decline of 11.6%.
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.
The company has a market capitalization of around $1.1 billion. It currently carries a Zacks Rank #3 (Hold). Let’s discuss the factors that indicate that the stock might stage a comeback.
Performance in Other Segments to Buoy TriMas
TriMas’ 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 applications. The current backlog and near-term order intake for steel cylinders remain at high levels. The Specialty Products segment's sales are likely to grow 12-15% on a year-over-year basis in 2023.
The order intake and backlog remain strong within the TriMas Aerospace segment. The company expects organic sales growth to accelerate in 2023. The production challenges experienced earlier have begun to ease on account of improved manufacturing efficiencies. The segment's sales are projected to grow 25-30% year over year in 2023.
Strong performances in the Specialty Products and Aerospace segments will help counter the weakness in the Packaging segment. In the Packaging segment, results will pick up eventually as the situation normalizes and customers' inventory resumes normal levels.
Investments to Aid Growth
The company's strong balance sheet and track record of strong cash flow generation provide ample capacity and flexibility to fund organic growth initiatives and strategic acquisitions, while also returning capital to shareholders. TriMas’ strategy is to accelerate growth through acquisitions, particularly in its Packaging and Aerospace platforms, backed by their prospects. Its strong product and process innovation will sustain long-term growth.
Over the past three years, TriMas completed six acquisitions and so far in 2023, the company has acquired Aarts Packaging and Weldmac Manufacturing. Aarts Packaging is an innovative, luxury packaging solutions provider for beauty and lifestyle brands, as well as for customers in the food and life sciences end markets. Weldmac Manufacturing Company is a leading designer and manufacturer of high-performance, complex metal fabricated components and assemblies for the aerospace, defense and space launch end markets.
Stocks to Consider
Some better-ranked stocks from the Industrial Products sector are Brady (BRC - Free Report) , Applied Industrial Technologies (AIT - Free Report) and A. O. Smith Corporation (AOS - Free Report) .
The Zacks Consensus Estimate for Brady’s 2023 earnings per share is pegged at $4.00. The consensus estimate for 2023 earnings has moved 13% north in the past 60 days and suggests year-over-year growth of 9.9%. The company has a trailing four-quarter average earnings surprise of 7.2%. Shares of BRC have rallied 19% in a year.
Applied Industrial has an average trailing four-quarter earnings surprise of 15%. The Zacks Consensus Estimate for AIT’s 2023 earnings is pinned at $9.43 per share, which indicates year-over-year growth of 7.8%. Estimates have moved up 4% in the past 60 days. The company’s shares have gained 29% in a year.
The Zacks Consensus Estimate for A. O. Smith’s 2023 earnings is pegged at $3.77 per share. The consensus estimate for 2023 earnings has moved 5% north in the past 60 days and suggests year-over-year growth of 20.1%. The company has a trailing four-quarter average earnings surprise of 14%. AOS shares have gained 28% in a year.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Shutterstock
TriMas (TRS) Stock Down 7% in a Year: Will It Bounce Back in 2024?
TriMas Corporation’s (TRS - Free Report) shares have lost 7% in a year against the industry’s 4.5% growth. This mainly reflects the weak performance of its packaging segment due to low demand. The segment’s organic growth has been in the negative territory over the past six quarters. Escalating raw material costs, supply-chain headwinds and labor shortages have also added to the company’s woes.
Weak Packaging Demand Weighs on TriMas
TriMas’ Packaging segment, which accounted for 59% of the company’s sales in 2022, has witnessed a year-over-year decline in its revenues over the past five quarters. Organic growth has been in the red since the second quarter of 2022.
Image Source: Zacks Investment Research
Demand has been weak as several of its customers became cautious regarding their spending amid the persisting inflationary scenario. They have also been rebalancing their inventories.
Although TRS had expected demand to pick up, the same has not yet materialized. TriMas anticipates the Packaging segment's year-over-year sales to decline 8% to 2% in 2023.
Consolidated sales growth is now projected to be 5-10% for 2023, much lower than its previous projection of 10% to 15%. TriMas expects adjusted earnings per share in the range of $1.80 to $1.95. The midpoint indicates a year-over-year decline of 11.6%.
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.
The company has a market capitalization of around $1.1 billion. It currently carries a Zacks Rank #3 (Hold). Let’s discuss the factors that indicate that the stock might stage a comeback.
Performance in Other Segments to Buoy TriMas
TriMas’ 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 applications. The current backlog and near-term order intake for steel cylinders remain at high levels. The Specialty Products segment's sales are likely to grow 12-15% on a year-over-year basis in 2023.
The order intake and backlog remain strong within the TriMas Aerospace segment. The company expects organic sales growth to accelerate in 2023. The production challenges experienced earlier have begun to ease on account of improved manufacturing efficiencies. The segment's sales are projected to grow 25-30% year over year in 2023.
Strong performances in the Specialty Products and Aerospace segments will help counter the weakness in the Packaging segment. In the Packaging segment, results will pick up eventually as the situation normalizes and customers' inventory resumes normal levels.
Investments to Aid Growth
The company's strong balance sheet and track record of strong cash flow generation provide ample capacity and flexibility to fund organic growth initiatives and strategic acquisitions, while also returning capital to shareholders. TriMas’ strategy is to accelerate growth through acquisitions, particularly in its Packaging and Aerospace platforms, backed by their prospects. Its strong product and process innovation will sustain long-term growth.
Over the past three years, TriMas completed six acquisitions and so far in 2023, the company has acquired Aarts Packaging and Weldmac Manufacturing. Aarts Packaging is an innovative, luxury packaging solutions provider for beauty and lifestyle brands, as well as for customers in the food and life sciences end markets. Weldmac Manufacturing Company is a leading designer and manufacturer of high-performance, complex metal fabricated components and assemblies for the aerospace, defense and space launch end markets.
Stocks to Consider
Some better-ranked stocks from the Industrial Products sector are Brady (BRC - Free Report) , Applied Industrial Technologies (AIT - Free Report) and A. O. Smith Corporation (AOS - Free Report) .
BRC currently sports a Zacks Rank #1 (Strong Buy) and AIT and AOS each carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Brady’s 2023 earnings per share is pegged at $4.00. The consensus estimate for 2023 earnings has moved 13% north in the past 60 days and suggests year-over-year growth of 9.9%. The company has a trailing four-quarter average earnings surprise of 7.2%. Shares of BRC have rallied 19% in a year.
Applied Industrial has an average trailing four-quarter earnings surprise of 15%. The Zacks Consensus Estimate for AIT’s 2023 earnings is pinned at $9.43 per share, which indicates year-over-year growth of 7.8%. Estimates have moved up 4% in the past 60 days. The company’s shares have gained 29% in a year.
The Zacks Consensus Estimate for A. O. Smith’s 2023 earnings is pegged at $3.77 per share. The consensus estimate for 2023 earnings has moved 5% north in the past 60 days and suggests year-over-year growth of 20.1%. The company has a trailing four-quarter average earnings surprise of 14%. AOS shares have gained 28% in a year.