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TriMas Corporation TRS remains well poised for growth driven by its focus on leveraging the TriMas Business Model, segment restructuring and a strong pipeline of both product as well as process innovation. A positive trend in estimate revisions also reflects optimism over the company's prospects. However, the Aerospace segment’s revenue growth will be dented by TriMas' decision to exit up to $4 million of less profitable business, primarily in the machine components product line. Further, resin pressure will impact Packaging segment’s margins.
The maker of engineered and applied products, with a market capitalization of approximately $1.33 billion, carries a Zacks Rank #3 (Hold). The stock has an estimated long-term earnings growth rate of 5%.
Let’s delve deeper and discuss the company's potential growth drivers and possible headwinds.
Factors Favoring TriMas
Over the past 30 days, the Zacks Consensus Estimate for earnings for fiscal 2018 and fiscal 2019 have both moved up 2%. The Zacks Consensus Estimate for earnings for fiscal 2018 is at $1.68 projecting year-over-year growth of 20%. For fiscal 2018, the Zacks Consensus Estimate is expected to climb 7.84% to $1.81.
Value Growth Momentum (VGM) Score
TriMas currently has a Zacks VGM Score of B. Here V stands for Value, G for Growth and M for Momentum. Such a score allows you to eliminate the negative aspects of stocks and select winners. The VGM Score of B, along with some other key metrics, makes the company a solid choice for investors.
Positive Earnings Surprise History
The company has surpassed the Zacks Consensus Estimate in two of the last four quarters, with an average beat of 3.97%.
TriMas has outperformed its industry with respect to price performance over the past year. The stock has appreciated around 32% while the industry has dipped 1.7%.
Long-Term Growth Drivers in Place
The company will continue to focus on leveraging the TriMas Business Model to drive performance which will fuel long-term growth. Its innovative solutions through product, process or service, as well as extensive resources will help enhance business performance. The company also has a strong pipeline of both product and process innovation that will sustain long-term growth and poise it well to capitalize on market opportunities as well as minimize market disruptions.
Near-Term Issues to Dent Segment Performance
In the Specialty Products segment, the Lamons business witnessed higher sales in the first quarter stemming from sales of specialty seals and gaskets used by refineries in their annual maintenance, much of which was deferred from last fall due to the impact of hurricanes in the United States. Further, to take advantage of strong energy prices, many refineries pulled forward their typical spring maintenance which is a common occurrence when the companies shift over from producing heating oil to gasoline for the summer months. Moreover, Norris Cylinder witnessed a strong order intake in the first quarter, which seems to have been triggered by customers ordering ahead of potential impacts of steel tariffs. So it remains uncertain whether the order flow witnessed in the first quarter in the segment is likely to continue or not.
The packaging segment, the company’s most profitable business, should benefit from new products and realignment of the segment’s manufacturing footprint. It continues to witness robust quoting activity within its existing and new product lines. However, margins will likely be affected by resin pricing pressure as well as the near-term impact from capacity additions, and continued investments for sales and technical resources, including new products.
In an effort to streamline operations and improve margins in the Aerospace segment, TriMas is exiting up to $4 million of less profitable business, primarily in the machine components product line. Though this will help improve the long-term profitability of this business, it will dent revenue growth for the year.
Stocks to Consider
Caterpillar Inc.’s CAT earnings estimates for full-year 2018 have increased by 15% to $10.58 per share in the last 30 days while estimates for 2019 rose 13% to $11.91 per share. The company currently sports a Zacks Rank #1 (Strong Buy). Its shares have gone up 51% over the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axon Enterprise, Inc. AAXN also witnessed positive estimates revisions for fiscal 2018 and 2019. The Zacks Consensus Estimate for fiscal 2018 has soared 100% to 82 cents per share in the last 30 days while estimates for fiscal 2019 climbed by 53% to $1.04 per share. The company currently flaunts a Zacks Rank #1. Its shares have soared 148% over the past year.
Both the fiscal 2018 and fiscal 2019 consensus for W.W. Grainger, Inc. GWW have moved up 2% to $14.90 per share and $16.79 per share, respectively, in the last 30 days. The company carries a Zacks Rank #1. Its shares have surged 73% in the past year.
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