Why Triumph's Shares Didn't

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Triumph Group (NYSE: TGI  ) are down nearly 7%, and reached an intraday low of 10% beneath yesterday's close, after releasing an earnings report that pairs solid quarterly results with disappointing forward guidance.

So what: Triumph's fiscal-fourth-quarter revenue came in at $986.3 million, well ahead of the $942.9 million consensus. Earnings of $1.68 per share likewise topped Wall Street's expectations of $1.59. However, the company's 2014 fiscal year guidance doesn't look too good, as Triumph expects between $3.8 billion and $4 billion on the top line and $6.30-$6.40 in EPS, both of which come in below the consensus numbers of $4.07 billion and $6.85 per share.

Now what: Keep in mind that even the low end of Triumph's 2014 guidance is a moderate improvement over 2013's results of $3.7 billion in revenue and $6.21 in adjusted earnings per share. However, it's not a particularly noteworthy improvement. Triumph remains inexpensive at a P/E barely in the double digits, but it's worth considering that even the high end of EPS guidance offers only a 3% improvement over the current year. If Triumph is to grow its share price this year, it's likely to have to do so on the basis of expanding valuations -- and the market doesn't seem to be interested in that possibility today.

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9/28/2016 4:02 PM
TGI $27.70 Up +0.40 +1.47%
Triumph Group CAPS Rating: *****