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TriMas (TRS) to Report Q4 Earnings: What's in the Offing?

Zacks Equity Research
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TriMas Corporation TRS is scheduled to report fourth-quarter 2018 results on Feb 28, before the opening bell.

 

In the last reported quarter, this diversified global manufacturer of engineered and applied products delivered year-over-year improvement of 23% in earnings as higher sales level, improved operating performance and prior realignment actions offset the impact of rising material costs. The company has outpaced the Zacks Consensus Estimate in three of the trailing four quarters, recording average earnings surprise of 3.37%.

 

Let’s see how things are shaping up prior to this announcement.

 

Earnings Whispers?

 

Our proven model does not conclusively show that TriMas is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

 

Zacks ESP: TriMas has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate is pegged at 38 cents. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

 

Zacks Rank: The company currently has a Zacks Rank #3, which when combined with the company’s ESP of 0.00% makes surprise prediction difficult.

 

Conversely, we caution against the Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

 

Factors to Consider

 

General industrial activity levels have improved, particularly in the United States, and this bodes well for TriMas’ fourth-quarter performance. The company is well poised 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 and enhancing its sales functions, and improvement of cost structure. TriMas will also benefit from the recently implemented tax reform.

 

However, the company’s results will be impacted by higher commodity costs, particularly steel, aluminum and oil based commodities. It also has to contend with increased tariffs on imported goods. TriMas continues to counter the impact of higher commodity costs and tariffs through commercial actions, supply chain management, leveraging its global manufacturing footprint and continued management of businesses under the TriMas Business Model. Further, the fourth quarter normally generates lower sales and profit owing to decreased levels of production activity on account of holidays and year-end customer shutdown.

 

The Zacks Consensus Estimate for earnings is pegged at 38 cents for the to-be-reported quarter, reflecting growth of 22.6% from 31 cents per share reported in the prior-year quarter.

 

Coming to segment, the Specialty Products segment (which contributed 35% of third-quarter 2018 sales) is likely to sustain momentum from improving energy and industrial end-markets. Management also continues to assess the cost structure of the segment. The packaging segment (which contributed 43% of third-quarter 2018 sales), its most profitable business, is likely to 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.

 

In the Aerospace segment (22% of third-quarter revenues), the company is witnessing solid order intake and order activity. It also witnessed some pickup in the military and defense area primarily through its distribution customers. The segment continues to focus on expanding the use of products on new and existing fixed and rotary wing platforms, and the unmanned aerial market. 

 

The Zacks Consensus Estimate for total revenues for fourth-quarter 2018 is pegged at $206.8 million, projecting year-over-year growth of 5.9%.

 

Stocks to Consider

 

Here are some stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.

 

Athene Holding Ltd. ATH has an Earnings ESP of +2.29% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

 

The Mosaic Company MOS has an Earnings ESP of +2.11% and a Zacks Rank #2.

 

Sun Hydraulics Corporation SNHY has an Earnings ESP of +0.84% and a Zacks Rank #3.

 

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