Why is Triumph Group (TGI) up 3% since its last earnings report?

About a month has passed since Triumph Group’s (TGI) last earnings report. The stock rose about 3% in that time, outperforming the S&P 500.

Will the recent positive trend continue into its next earnings release, or is Triumph Group headed for a pullback? Before we dive into how investors and analysts have reacted recently, let’s take a quick look at the most recent earnings report to better understand the important catalysts.

Triumph Group beats first-quarter sales estimates, reports losses

Triumph Group reported an adjusted first-quarter fiscal 2024 loss of 10 cents per share, which was wider than the Zacks Consensus Estimate of a loss of 5 cents per share. Financial results were down significantly from earnings of 12 cents reported in the prior-year quarter.

Including one-time adjustments, TGI reported a GAAP loss of 19 cents per share in the first quarter of fiscal 2024 compared with 16 cents in the prior-year quarter.

Total sales

Triumph Group’s net sales for the quarter were $327.1 million, which topped the Zacks Consensus Estimate of $324 million by 0.9%. However, revenue fell 6.4% from $349.4 million in the year-ago quarter.

Excluding divestitures and terminated programs, organic sales for the quarter were up 14% year over year. Growth was driven by growth in commercial OEM sales, improved commercial aftermarket sales and a recovery in military OEM sales.

Operational Highlights

In the first quarter of fiscal year 2024, Triumph Group generated adjusted operating income of $24.4 million, down 25.2% from the prior-year figure.

Interest and other expenses totaled $38.5 million, an increase of 20.5% compared to the prior-year quarter.

Triumph Group’s order backlog totaled $1.74 billion, up 10% from the end of the previous fiscal year, with orders coming mostly from the single-aisle commercial platform segment.

Segment performance

Interiors: Total segment sales were $36.6 million, down 61.4% from $94.8 million in the year-ago quarter. The segment reported operating income of $2.6 million in the first quarter of fiscal 2024.

Systems and support: Segment sales increased 14.1% year over year to $290.6 million. Operating income was $45.8 million in the first quarter of fiscal 2024.

Financial position

As of June 30, 2023, TGI’s cash and cash equivalents were $146.3 million compared to $227.4 million as of March 31, 2023.

Its long-term debt (excluding current portion) was $1.68 billion as of June 30, 2023, compared with $1.69 billion as of March 31, 2023.

Net cash outflow from operating activities as of June 30, 2023 was $63.7 million compared to net cash outflow of $93 million in the prior year period.

Triumph Group’s capital expenditure was $6.4 million as of June 30, 2023, compared to $3 million in the previous year.

Conductivity

Triumph Group has provided financial guidance for fiscal 2024. It expects net sales to be between $1.39 billion and $1.43 billion. The Zacks Consensus Estimate for revenue is $1.43 billion, which is at the high end of the company’s projected range.

TGI expects cash used in operations to be in the range of $60 million to $80 million in fiscal 2024. Free cash flow in fiscal 2024 is expected to be in the range of $35 million to $50 million.

How have estimates changed since then?

Over the past month, investors have witnessed a downward trend in estimate revisions.

Consensus estimates changed by -40% due to these changes.

VGM Results

Currently, Triumph Group has a poor growth score of F, which means the same result in terms of momentum. However, the stock is rated B for value, putting it in the second quintile for this investment strategy.

Overall, the stock has a Total VGM Score of D. If you’re not focused on one strategy, this score should interest you.

Perspectives

Stock estimates are trending downwards and the scale of these revisions is zero. Interestingly, Triumph Group has a Zacks Rank #3 (Hold). We expect consistent returns from the stock over the next few months.

Industry player performance

Triumph Group is a part of the Zacks Aerospace – Defense Equipment industry. Over the past month, Hexcel (HXL), a stock in the same industry, has gained 7.8%. The company released its results for the quarter ended June 2023 over a month ago.

In the most recent quarter, Hexcel reported revenues of $454.3 million, representing a year-over-year change of +15.6%. EPS of $0.50 for the same period compared to $0.33 a year ago.

For the current quarter, Hexcel is expected to report earnings per share of $0.42, representing a change of +27.3% from the prior-year quarter. The Zacks Consensus Estimate has changed +0.3% over the past 30 days.

The overall direction and magnitude of estimate revisions are worth a Zacks Rank of #2 (Buy) for Hexcel. The stock also has a VGM Score of C.

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