Triumph Group (TGI) AI Stock Analysis

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Triumph Group

(NYSE:TGI)

54Neutral

Triumph Group shows signs of operational improvement with better profitability and reduced leverage, but faces significant challenges with declining revenues and negative cash flows. The technical analysis indicates strong upward movement, though caution is warranted due to overvaluation concerns and overbought indicators.

Positive Factors

Acquisition

TGI shareholders will receive $26 per share in cash, representing a 39% premium to the closing price before the deal was announced.

Earnings

Overall performance was strong as EBITDA topped expectations and cash flow came in better than what management had previously guided.

Financial Performance

Significant restructuring efforts in recent years saw the company divest the lower margin Structures business, while also cleaning up the Balance Sheet following the divestment of the third-party MRO Product Support business.

Negative Factors

Analyst Downgrade

Shares of Triumph Group are downgraded to Peer Perform from Outperform as the company has agreed to be purchased by a newly formed entity under Warburg Pincus and Berkshire Partners.

Market Sentiment

TGI management are exploring a potential sale of the company, which should be attractive for investors as headwinds tied to lower OEM production rates are weighing on near-term sentiment.

Stock Performance

The stock is down ~18% YTD in 2024, significantly underperforming the overall market, mostly impacted by BA quality escapes tied to the January 5 plugged door incident and the ongoing strike action.

Triumph Group (TGI) vs. S&P 500 (SPY)

Market Cap

$1.98B

Dividend YieldN/A

Average Volume (3M)1.86M

Price to Earnings (P/E)283.3

Beta (1Y)1.15

Revenue Growth-8.59%

EPS GrowthN/A

CountryUS

Employees4,530

SectorIndustrials

Sector Strength83

IndustryAerospace & Defense

Share Statistics

EPS (TTM)0.27

Shares Outstanding77,417,240

10 Day Avg. Volume934,836

30 Day Avg. Volume1,863,283

Financial Highlights & Ratios

PEG Ratio0.61

Price to Book (P/B)-24.07

Price to Sales (P/S)0.00

P/FCF Ratio-35.78

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$26.00

Price Target Upside1.36% Upside

Rating ConsensusHold

Number of Analyst Covering1

Triumph Group Business Overview & Revenue Model

Company DescriptionTriumph Group, Inc. (TGI) is a global leader in the design, engineering, manufacturing, and repair of aerospace and defense systems. The company operates in several sectors, including aerostructures, systems and support, and aftermarket services. Triumph Group's core products and services include aircraft components, systems integration, and maintenance, repair, and overhaul (MRO) services for both commercial and military aircraft.

How the Company Makes MoneyTriumph Group makes money through a diversified revenue model that includes the sale of aerostructures and aircraft components, systems integration services, and aftermarket support. Key revenue streams are generated from contracts with major aerospace manufacturers, defense organizations, and airlines. The company also benefits from long-term maintenance, repair, and overhaul (MRO) agreements that provide recurring revenue. Strategic partnerships and collaborations with major aerospace and defense firms further contribute to its earnings, allowing Triumph Group to expand its market reach and enhance its technological capabilities.

Triumph Group Financial Statement Overview

Summary

Triumph Group has demonstrated improvements in profitability and leverage, with a strong turnaround in equity. However, declining revenue and continued negative cash flows highlight ongoing challenges in sales growth and cash generation. The company shows potential for recovery, but risks remain due to its debt levels and cash flow constraints.

Income Statement

Positive

The income statement shows positive growth in net income and profitability. The gross profit margin improved in the TTM, indicating better efficiency in cost management. However, the revenue has declined over recent years, suggesting challenges in maintaining sales growth. The EBIT and EBITDA margins have shown improvement, reflecting better operational performance.

Balance Sheet

Neutral

The balance sheet reveals a substantial improvement in stockholders' equity, moving from negative to positive, which is a positive turnaround. The debt-to-equity ratio has improved significantly, indicating reduced leverage. However, the company still has considerable debt, which poses a risk to financial stability. The equity ratio is healthy, suggesting a stable asset base.

Cash Flow

Neutral

Cash flow statements indicate a positive shift in free cash flow and operating cash flow, although both remain negative. This improvement points to better cash management, but the company still faces challenges in generating positive cash flows. The operating cash flow to net income ratio is negative, indicating reliance on non-operational activities for cash generation.

TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Breakdown
Income Statement		Total Revenue
1.24B	1.19B	1.38B	1.46B	1.87B	2.90B
	Gross Profit
364.25M	322.84M	387.53M	386.88M	393.45M	592.72M
	EBIT
135.63M	86.45M	161.19M	140.55M	133.68M	237.61M
	EBITDA
152.87M	125.30M	149.26M	147.66M	-183.30M	361.41M
	Net Income Common Stockholders
560.13M	512.38M	89.59M	-42.76M	-450.91M	-29.43M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
133.49M	392.51M	227.40M	240.88M	589.88M	485.46M
	Total Assets
1.51B	1.69B	1.71B	1.76B	2.45B	2.98B
	Total Debt
970.35M	1.09B	1.69B	1.59B	1.96B	1.88B
	Net Debt
836.86M	702.16M	1.46B	1.35B	1.37B	1.39B
	Total Liabilities
1.59B	1.79B	2.51B	2.55B	3.27B	3.76B
	Stockholders Equity
-82.32M	-104.41M	-797.40M	-787.42M	-818.85M	-781.26M
Cash Flow		Free Cash Flow
-55.37M	-12.38M	-72.93M	-156.68M	-198.30M	56.83M
	Operating Cash Flow
-34.41M	9.44M	-52.25M	-137.02M	-173.12M	96.67M
	Investing Cash Flow
696.98M	689.92M	-27.17M	181.21M	-9.29M	7.39M
	Financing Cash Flow
-688.72M	-534.34M	65.79M	-392.66M	277.25M	293.69M

Triumph Group Technical Analysis

Technical Analysis Sentiment

Positive

Last Price25.65

Price Trends

50DMA

25.26

Positive

100DMA

23.28

Positive

200DMA

19.21

Positive

Market Momentum

MACD

0.16

Negative

RSI

65.89

Neutral

STOCH

84.70

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TGI, the sentiment is Positive. The current price of 25.65 is above the 20-day moving average (MA) of 25.30, above the 50-day MA of 25.26, and above the 200-day MA of 19.21, indicating a bullish trend. The MACD of 0.16 indicates Negative momentum. The RSI at 65.89 is Neutral, neither overbought nor oversold. The STOCH value of 84.70 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TGI.

Triumph Group Risk Analysis

Triumph Group disclosed 36 risk factors in its most recent earnings report. Triumph Group reported the most risks in the “Production” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Triumph Group Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DCO	72 Outperform	$989.22M	28.51	5.25%	―	3.02%	95.76%
Sector *	64 Neutral	$4.36B	12.05	5.23%	249.94%	4.13%	-10.23%
AIR	63 Neutral	$2.21B	246.75	-1.08%	―	21.07%	-120.95%
ATRO	63 Neutral	$1.03B	―	-1.35%	―	13.73%	86.81%
MRCY	59 Neutral	$2.78B	―	-4.45%	―	5.66%	52.71%
TGI	54 Neutral	$1.98B	283.30	46.74%	―	-8.59%	―
SPR	37 Underperform	$4.33B	―	81.63%	―	-2.91%	-109.95%

* Industrials Sector Average

Performance Comparison

TGI

Triumph Group

25.65

10.97

74.73%

AIR

AAR

61.38

-10.72

-14.87%

ATRO

Astronics

29.78

10.86

57.40%

DCO

Ducommun

66.06

9.32

16.43%

MRCY

Mercury Systems

46.73

17.80

61.53%

SPR

Spirit AeroSystems

37.30

6.70

21.90%

Triumph Group Earnings Call Summary

Earnings Call Date:Feb 06, 2025

(Q2-2025)

% Change Since: 1.87%|

Next Earnings Date:May 14, 2025

Earnings Call Sentiment Positive

The earnings call highlighted significant achievements in cash performance, aftermarket growth, and the restoration of Interiors business profitability. The company raised its fiscal 2025 guidance, indicating strong confidence in future performance. Despite some challenges, such as temporary declines in the V-22 program and Boeing backlog pushouts, the positive aspects significantly outweigh the negatives.

Q2-2025 Updates

Positive Updates

Strong Cash Performance and Aftermarket Growth

Exceeded cash guidance by $35 million and accelerated aftermarket growth with a 13% year-over-year increase. Aftermarket contributed over 60% of profit, offsetting some Commercial OEM softness.

Restoration of Interiors Business Profitability

Interiors business returned to profitability through a settlement with Boeing and cost reductions. Expected to achieve higher historical levels of profitability as Commercial OEM volumes return.

Increased Fiscal 2025 Guidance

Raised fiscal '25 guidance for profitability and cash flow. Expecting EBITDAP of $190 million to $195 million and free cash flow of $20 million to $30 million.

Successful Military OEM and Aftermarket Performance

Military OEM revenues increased, with a backlog growth of 4%. Aftermarket backlog increased by 12%, driven by strong spares and repairs orders.

Operational Excellence Across All Operating Companies

Achieved tenth consecutive quarter of organic growth and improved operational excellence.

Negative Updates

Temporary Decline in V-22 Actuators Overhaul

Short-term declines in V-22 actuators overhaul due to temporary flight restrictions on the Osprey fleet.

Pushouts in Boeing Program Backlogs

Backlog on Boeing programs declined $60 million due to selective pushouts of deliveries beyond 24 months.

Supply Chain Challenges and OEM Revenue Headwinds

Faced supply chain challenges and OEM revenue headwinds, although these are expected to improve in the second half.

Company Guidance

During the Triumph Group's second quarter fiscal 2025 earnings call, several key metrics were highlighted, reflecting the company's strong performance and optimistic outlook. The company exceeded its cash guidance by $35 million, setting a positive trajectory for achieving its full-year free cash flow target. Notably, aftermarket revenues surged 13% year-over-year, contributing over 60% of the company's profits, driven by robust sales in both commercial and military markets. The aftermarket segment achieved gross margins of 57%. Triumph's total aftermarket backlog increased by 12% to approximately $100 million. The company also reported a 30% growth in aftermarket revenue, with total consolidated revenue reaching $287 million, and an adjusted operating income increase of 44% to $36 million. Adjusted EBITDAP was $43 million, reflecting a 26% rise, and an adjusted EBITDAP margin expanded by about 300 basis points to 15%. Triumph's fiscal 2025 guidance was raised, with expected EBITDAP now between $190 million and $195 million, and free cash flow projections increased to $20 million to $30 million.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.