Triumph Group: Earnings Preview

| About: Triumph Group, (TGI)

Triumph Group Inc. (NYSE:TGI) is scheduled to report its fourth-quarter and fiscal 2012 earnings on Wednesday, May 2, 2012, after the market closes. The current Zacks Consensus Estimate is earnings of $1.31 per share, representing annualized growth of 39%.

With respect to earnings surprises over the trailing four quarters, TGI outperformed the Zacks Consensus Estimate in three quarters and was in line in one; leading to an average earnings surprise of 14%. The average earnings surprise reflects that the company has surpassed the Zacks Consensus Estimate by the same magnitude over the last four quarters.

Third Quarter 2012 Highlights

On January 30, Triumph Group Inc.'s earnings per share came in at $1.29, substantially up from $0.88 in the year-ago quarter. Results also surpassed the Zacks Consensus Estimate of $1.12.

The encouraging results were attributable to improved execution, synergy realization and expense cutback across almost all business segments.

In the third quarter of 2012, the company's net sales inched up 2% year over year to $826.0 million, with 2% organic growth. Segment wise, sales from Aerostructures surged 2% to $626.0 million from $613.5 million in the prior-year quarter. Aerospace System revenue grew 7% year over year to $133.3 million, while Aftermarket Services dropped 8% to $68.6 million from the all-time high record of $74.7 million in the year-ago quarter due to a reduction in military sales.

Agreement of Estimate Revisions

In the last 30 days, one analyst increased the company's earnings per share estimates, while one decreased for the fourth quarter of 2012. For fiscal 2012, one analyst decreased estimate and for fiscal 2013, none increased or decreased their estimates over the last 30 days.

In the last 7 days, none of the analysts increased or decreased estimates. Moreover, for fiscal 2012 as well as for fiscal 2013, there were no estimate revisions.

Magnitude of Estimate Revisions

Estimates over the last 30 days increased marginally from $1.30 to $1.31 per share for the fourth quarter of 2012. However, over the last 30 days, estimate for fiscal 2012 and fiscal 2013 remained unchanged at $4.72 and $5.34, respectively. These estimates represent year-over-year growth of 39% for 2012 and 13% for 2013.

Estimates over the last 7 days remained unchanged at $1.31 per share for the fourth quarter of 2012. Moreover, over the last 30 days, estimate for fiscal 2012 and fiscal 2013 remained unchanged at $4.72 and $5.34, respectively.

Our Take

Triumph Group is likely to post impressive fourth quarter results based on ongoing improvement in global commercial and freight/cargo traffic alongside rising business opportunities worldwide. Moreover, the company's commendable execution, in almost all its businesses over the last fewquarters, drives optimism. The company's cost control programs are also anticipated to induce margin expansion.

The company serves commercial and regional airlines, air cargo carriers, as well as OEMs of commercial, regional, business and military aircrafts, sharing global platform with other industry players, such as AAR Corp. (NYSE:AIR) and Goodrich Corp. (NYSE:GR).

We maintain a long-term Neutral recommendation on the stock. Triumph Group has a Zacks #3 Rank, which translates into a short-term (1-3 months) Hold rating.

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Tagged: , Aerospace/Defense Products & Services, Earnings
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