Strategies, Strong Product Pipeline to Fuel Growth at TriMas
On Aug 16, we issued an updated research report on TriMas Corporation TRS. The company is expected to gain from its focus on leveraging the TriMas Business Model. A strong pipeline of both product and process innovation will also fuel growth.
Upbeat Q2 & Fiscal 2018
TriMas delivered adjusted earnings of 48 cents per share in second-quarter 2018, up 20% from the prior-year period driven by its focus on commercial efforts, improved market conditions and realignment actions. It generated revenues of $225 million in the quarter, up 5% year over year.
Backed by upbeat first-half performance, TriMas projects earnings per share between $1.65 and $1.75 for 2018, marking year-over-year growth of 21% at the mid-point, compared with the prior guidance of $1.60-$1.75. The company estimates organic sales to be up around 5% (up from the previous expectation of 3%). The Zacks Consensus Estimate for fiscal 2018 for earnings is at $1.71, reflecting year-over-year growth of 22% while revenues are at $864 million, projecting year-over-year improvement of 6%.
General industrial activity levels have improved, particularly in the United States, and this bodes well for TriMas. The company is well positioned to take advantage of the incremental volume opportunities and continues to capitalize on its internal sales growth programs. The company has also refocused certain commercial efforts, including realigning as well as enhancing its sales functions and improvement of cost structure.
Segments Geared up for Growth
The company expects the Specialty Products segment to attain sales growth of nearly 9% in 2018. The Specialty Products segment now incorporates the Lamons, Arrow Engine and Norris Cylinder industrial businesses. The segment will benefit from improved performance in these businesses on the back of recovering energy and industrial end-markets. Management also continues to assess the cost structure of the segment.
Further, recently, the U.S. Department of Commerce issued a preliminary finding to increase countervailing duties to combat China’s supply of high pressure steel cylinders. The preliminary finding increases duties on high pressure steel cylinders imported from China from the current 15.81% to a new level of 37.77%. If this is implemented, it will benefit the Norris Cylinder operations.
The packaging segment, the company’s most profitable business, should benefit from new products and realignment of the segment’s manufacturing footprint. The business continues to develop specialty dispensing and closure applications for higher-growth global markets (industrial, food and beverage and heath, beauty and home care). The company is developing its global marketing and salesforce to better align with end-markets and customers. Further, the segment continues to witness robust quoting activity within its existing and new product lines.
TriMas Business Model, Products to Drive Growth
TriMas continues to focus on leveraging the TriMas Business Model in order to drive the company’s performance. Its innovative solutions through product, process or service, as well as extensive resources will help strengthen business. Consequently, by refocusing on these efforts under the business model, the company will continue to recognize synergies, aiding results.
The company also has a robust pipeline of both product and process innovation that will sustain long-term growth and position its businesses to take advantage of market opportunities as well as minimize market disruptions.
Share Price Performance
Shares of TriMas have appreciated around 29% over the past year against its industry’s decline of 12%.
Zacks Rank & Other Stocks to Consider
TriMas carries a Zacks Rank #2 (Buy).
Other top-ranked stocks in the sector include W.W. Grainger, Inc. GWW, Actuant Corporation ATU and Atkore International Group Inc. ATKR. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Grainger has a long-term earnings growth rate of 12.5%. Its shares have appreciated 119%, over the past year.
Actuant has a long-term earnings growth rate of 15.6%. The company’s shares have gained 24% in a year’s time.
Atkore International has a long-term earnings growth rate of 10%. The stock has rallied 63% in a year’s time.
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