It has been about a month since the last earnings report for Triumph Group (TGI). Shares have added about 1.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Triumph Group due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Triumph Group Q3 Earnings Beat, Revenues Lag Estimates
Triumph Group adjusted earnings from continuing operations in third-quarter fiscal 2019 (ended Dec 31, 2018) came in at 42 cents per share, which surpassed the Zacks Consensus Estimate of 38 cents by 10.5%. However, the reported figure declined 44.7% from 76 cents per share registered in the prior-year quarter.
Including one-time adjustments, the company incurred GAAP loss of 62 cents compared with $2.29 a year ago.
Net revenues of $807.9 million lagged the Zacks Consensus Estimate of $822 million by 1.7% but improved 4.2% year over year.
Organic sales in the quarter improved 7% year over year driven by increased shipments for narrow body programs such as the 737, 787 and A320, military platforms, aftermarket accessory services and development programs transitioning to production.
In third-quarter fiscal 2019, the company’s operating loss was $16.9 million narrower than $154.2 million in the year-ago quarter.
Interest expenses and other amounted to $29.3 million compared with $25.8 million in the prior-year quarter.
Backlog was $4.3 billion, in line with the prior-year period’s figure.
Aerospace Structures: Segment sales totaled $490.3 million, up 3.6% from $473.3 million in the year-ago quarter. Operating loss was $49.8 million, narrower than $193.2 million in the same period last year.
Integrated Systems: Segment sales rose 5.5% year over year to $252.4 million. Operating income summed $39.9 million, down 5.4% from the year-ago level of $42.2 million.
Product Support: Segment sales improved 5% year over year to $71.4 million in the reported quarter. Operating income amounted to $11.4 million compared with the year-ago figure of $12.4 million.
As of Dec 31, 2018, Triumph Group’s cash and cash equivalents were $28.7 million compared with $35.8 million on Mar 31, 2018. Its long-term debt (excluding current portion) amounted to $1.62 billion as of Dec 31, 2018, compared with $1.42 billion on Mar 31, 2018.
Cash used in operating activities in the first nine months of fiscal 2019 was $193.1 million compared with $198.3 million in the corresponding period of fiscal 2018. The company spent $34.8 million as capital expenditures in the first nine months of the fiscal year compared with $31.9 million in the prior-year period.
Triumph Group reaffirmed its fiscal 2019 guidance. Based on anticipated aircraft production rates and divestitures completed in fiscal 2018, the company continues to anticipate its revenues in the range of $3.3-$3.4 billion.
On the bottom-line front, the company continues to expect its adjusted earnings per share in the $1.50-$2.10 band.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
At this time, Triumph Group has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Triumph Group has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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