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Triumph Group (TGI) Down 14.2% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Triumph Group (TGI - Free Report) . Shares have lost about 14.2% 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 its most recent earnings report in order to get a better handle on the important drivers.

Triumph Group Q4 Earnings Top Estimates, Sales Down Y/Y

Triumph Group Inc.’s adjusted earnings from continuing operations in fourth-quarter fiscal 2019 (ended Mar 31, 2019) came in at $1.15 per share, which surpassed the Zacks Consensus Estimate of 68 cents by 69.1%. The bottom line also improved 29.2% from 89 cents per share registered in the prior-year quarter.

Including one-time adjustments, the company incurred GAAP loss of $4.01 compared with a loss of $6.16 a year ago.

In fiscal 2019, the company generated adjusted earnings of $2.49 compared with the year-ago quarter’s figure of $2.41.

Total Sales

Net sales in the quarter under review came in at $869 million, outpacing the Zacks Consensus Estimate of $832 million by 4.4%. However, the top line declined 3.1% on a year-over-year basis.

Organic sales in the quarter were flat year over year as increased shipments for narrow body programs such as the 737, 787 and A320, military platforms, aftermarket accessory services and development programs transitioning to production were offset by declines in business jet volumes.

In fiscal 2019, the company generated sales of $3.36 billion compared with $3.19 billion a year ago.

Operational Highlights

In fourth-quarter fiscal 2019, the company’s operating loss was $189.2 million, narrower than $310.4 million in the year-ago quarter.

Interest expenses and other amounted to $31.1 million compared with $27.2 million in the prior-year quarter.

Backlog was $3.8 billion, up 4% organically from the prior-year period’s figure.

Segmental Performance

Aerospace Structures: Segment sales totaled $511.3 million, down 7.1% from $550.4 million in the year-ago quarter. Operating loss was $0.3 million, significantly narrower than $343.5 million in the same period last year.

Integrated Systems: Segment sales rose 4.9% year over year to $288.8 million. Operating income summed $42.4 million, down 22.3% from the year-ago level of $54.6 million.

Product Support: Segment sales declined 6.6% year over year to $73.9 million in the reported quarter. Operating income amounted to $12.9 million compared with the year-ago figure of $13.6 million.

Financial Position

As of Mar 31, 2019, Triumph Group’s cash and cash equivalents totaled $92.8 million compared with $35.8 million on Mar 31, 2018. Its long-term debt (excluding current portion) amounted to $1.48 billion as of Mar 31, 2019, compared with $1.42 billion on Mar 31, 2018.

Cash used in operating activities in fiscal 2019 was $174.3 million compared with $288.9 million last year. The company spent $47.1 million as capital expenditures in fiscal 2019 compared with $42.1 million in the prior year.

Guidance

Triumph Group issued its fiscal 2020 guidance. Based on anticipated aircraft production rates and including the impacts of pending program transfers, the company anticipates its revenues in the $2.8-$2.9 billion range. The Zacks Consensus Estimate for fiscal 2020 earnings is pegged at $2.85 billion, in line with the mid point of the company’s projected view.

On the bottom-line front, the company expects its adjusted earnings per share in the $2.35-$2.95 band. For fiscal 2020 earnings, the Zacks Consensus Estimate is pinned at $2.40, much below the mid point of the company’s guided range.

How Have Estimates Been Moving Since Then?

Fresh estimates followed an upward path over the past two months. The consensus estimate has shifted 73.79% due to these changes.

VGM Scores

Currently, Triumph Group has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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

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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