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Packaging to Offset Weakness in TriMas' (TRS) Other Markets

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TriMas Corporation TRS has been benefiting from strong performance in its Packaging segment courtesy of increasing demand for personal hygiene products, home and industrial cleaning, food and beverage and pharmaceuticals amid the coronavirus pandemic. However, weak demand in the aerospace segment, lower volumes in Specialty Products and higher input costs remain headwinds. Nevertheless, the company is advancing well with TriMas Business Model that aims to improve the performance of its businesses. Moreover, its strong pipeline of both product and process innovation, and buyouts to augment portfolio and expand geographic presence will drive growth.

Ongoing Momentum in Packaging Segment Bodes Well

TriMas reported revenues of $207 million in first-quarter 2021, reflecting year-over-year improvement of 13% on record sales in the Packaging segment (which drives around 65% of its revenues) and recent buyouts. Adjusted earnings were 40 cents per share, up 18% year over year. Notably, the Packaging segment has been gaining from high demand for dispensing pumps and closure products sold into applications that help fight the spread of germs or are used in cleaning amid the pandemic. This is expected to drive the company’s top-line performance until the situation stabilizes.

Weakness in Few End-Markets & High Costs Persist

Demand for TriMas’ products tied to commercial aircraft build rates have declined due to lower air travel and reduced commercial and business jet production on account of the pandemic. The commercial and business aviation end markets will continue to be under pressure in the near term. Volumes in the company’s Specialty Products segment remain weak due to the pandemic. Lower demand for Norris steel cylinder products in the industrial market remains a concern given that TriMas is the only steel cylinder manufacturer in North America and generates nearly 90% of the segment’s revenues. Further, the company has been facing higher input costs, which will weigh on its near-term margins.

Acquisitions to Aid Growth

In 2020, TriMas completed three bolt-on acquisitions, RSA Engineered Products, Affaba & Ferrari and Rapak. These buyouts boosted the company’s packaging and aerospace portfolio. The company is likely to benefit from these acquisitions in the coming years, which in turn will drive its top-line results. RSA expanded TriMas’ aerospace presence into environmental control system applications, the defense and business jet markets, and aerospace aftermarket, while the Rapak brand buyout boosted TriMas’ packaging portfolio. Also, the Affaba & Ferrari buyout aided the company in strengthening its Packaging segment. TriMas has a robust pipeline of potential M&A in the Packaging and Aerospace segments.

Other Growth Drivers in Place

TriMas will continue to focus on leveraging the TriMas Business Model, which was implemented in late 2016 to improve management and performance of its businesses. Its innovative solutions through product, process or service, and 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 position its businesses to capitalize on market opportunities and minimize market disruptions. Also, TriMas’ strong balance sheet and track record of strong cash flow generation not only position it well to sail through the troubled times but also provide both ample capacity and flexibility to fund its capital allocation priorities.

Share Price Performance

Shares of TriMas have gained 28.3% over the past year, compared with the industry’s rally of 61.6%.

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Zacks Investment Research

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Zacks Rank & Stocks to Consider

TriMas currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Industrial Products sector include Greif, Inc. GEF, Lindsay Corporation LNN and Pentair plc PNR. All of these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Greif has an estimated earnings growth rate of 47.1% for the ongoing fiscal. The company’s shares have gained 73.3% in a year.

Lindsay has a projected earnings growth rate of 1% for fiscal 2021. The company’s shares have appreciated 83.5% over the past year.

Pentair has an expected earnings growth rate of 26% for the current year. The stock has surged 81.7% in a year’s time.

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TriMas Corporation (TRS) : Free Stock Analysis Report

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Greif, Inc. (GEF) : Free Stock Analysis Report

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