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Triumph Group (TGI) Down 14.7% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Triumph Group (TGI - Free Report) . Shares have lost about 14.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Triumph Group due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers. <p style="text-align: justify;"><strong>Triumph Group Q1 Earnings Lag, Revenues Top Estimates</strong><br /><br />Triumph Group adjusted earnings from continuing operations in first-quarter fiscal 2019 (ended Jun 30, 2018) came in at 34 cents per share, which missed the Zacks Consensus Estimate of 36 cents by 5.6%. However, the reported figure improved 41.7% from 24 cents per share in the prior-year quarter.<br /><br />Excluding one-time adjustments, the company reported GAAP loss of $1.54 compared with the year-ago quarter&rsquo;s loss of 4 cents.<br /><br /><strong>Total Revenues</strong><br /><br />Net revenues totaled $832.9 million, which exceeded the Zacks Consensus Estimate of $802 million by 3.8%. The top line also improved 6.6% year over year.<br /><br />Organic sales in the quarter improved 3% year over year driven by the ramp on the Global 7500 as well as increased rotorcraft deliveries and higher demand for structural component repairs.<br /><br /><strong>Operational Highlights</strong><br /><br />In first-quarter fiscal 2019, the company&rsquo;s operating loss was $66.5 million, wider than the loss of $1 million in the year-ago quarter.<br /><br />Adjusted operating income amounted to $29.5 million during the first quarter of fiscal 2018, compared with $17.4 million in the first quarter of fiscal 2017.<br /><br /><strong>Quarterly Segment Performance</strong><br /><br />Aerospace Structures: Segment sales totaled $532.4 million, up 10.2% from $483.3 million in the year-ago quarter. Operating loss was $79.6 million, wider than the loss of $22.5 million in the same period last year.<br /><br />Integrated Systems: Segment sales rose 1.2% year over year to $241 million. Operating income was $35.4 million, down from the year-ago level of $47 million.<br /><br />Product Support: Segment sales slipped 0.3% year over year to $66.2 million in the reported quarter. Operating income summed $7.7 million compared with the year-ago quarter&rsquo;s income of $8.4 million.<br /><br /><strong>Financial Position</strong><br /><br />As of Jun 30, 2018, Triumph&rsquo;s cash and cash equivalents were $33.1 million compared with $35.8 million as of Mar 31, 2018. As of Jun 30, 2018, long-term debt (excluding current portion) amounted to $1.50 billion compared with $1.42 billion as of Mar 31, 2018.<br /><br />Cash outflow from operations at the end of first-quarter fiscal 2019 was $65.7 million compared to $288.9 million at fiscal 2018-end. The company spent $12.2 million as capital expenditures in the reported quarter compared to $12.1 million in the prior-year quarter.<br /><br /><strong>Guidance</strong><br /><br />Triumph reaffirmed its fiscal 2019 guidance. Based on anticipated aircraft production rates and divestitures completed in fiscal 2018, the company continues anticipating its revenues for fiscal 2019 in the range of $3.3-$3.4 billion. It still expects revenue growth in fiscal 2019 to be driven by development programs enter production, and sales from continuing programs and new wins offset sunsetting programs.<br /><br />On the bottom-line front as well, the company continues expecting adjusted earnings per share in the $1.50-$2.10 band.</p>

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, Triumph Group has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

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

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Triumph Group has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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