Triumph Group Hit by Low Organic Sales, Commodity Prices
We issued an updated research report on Triumph Group, Inc. TGI on Mar 14. The company’s stock has lost 19.1% in the last one year, comparing unfavorably with the Zacks categorized Aerospace/Defense Equipment industry’s gain of 22.1% over the same time frame.
The primary reasons for this underperformance are the drop in organic sales and volatility in energy and commodity prices.
Being a provider of products and services to the aerospace industry, Triumph Group’s performance largely depends on orders from defense majors like The Boeing Company BA and General Dynamics GD. Since Boeing accounts for more than 30% of the company’s net sales, a considerable reduction in purchases by the company might have a material impact on its financial performance.
A large percentage of the company’s aftermarket sales come from third-party repair and overhaul, thus exposing it to tough competition from original equipment manufacturers (OEMs) as well as third-party organizations. With freight demand being unstable, the outlook of the cargo market remains obscure.
Moreover, the company missed the Zacks Consensus Estimate in the four trailing quarters, the average negative surprise being 13.11%. The earnings growth estimate for the next fiscal is pegged at -7.90%.
Moreover, Triumph Group faces intense competition from Aerospace-Defense equipment providers like HEICO Corporation HEI which has outperformed the industry over the last one year.
On a brighter note, across its four business units, Triumph Group’s pipeline of addressable opportunities continues to expand. Currently, the company is tracking over 800 active opportunities worth over $16 billion. During the third quarter of fiscal 2017, Triumph Group had 55 competitive new business wins worth over $350 million.
Zacks Rank
Triumph Group currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Boeing Company (The) (BA): Free Stock Analysis Report
General Dynamics Corporation (GD): Free Stock Analysis Report
Triumph Group, Inc. (TGI): Free Stock Analysis Report
Heico Corporation (HEI): Free Stock Analysis Report
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