Issues at Boeing are further delaying a long-awaited rebound at supplier Triumph Group (TGI -3.77%).
Shares of the aerospace component manufacturer traded down as much as 11.8% this week, according to data provided by S&P Global Market Intelligence, and were down 6% for the week heading into the close on Friday, as a strong earnings report was offset by weak guidance about the quarters to come.
An uncertain journey gets a new twist
Triumph Group is one of the longest-running turnaround stories in the aerospace sector. The company's shares have lost about 80% of their value over the last decade and have remained mired near those lows since before the pandemic, hampered by unprofitable contracts and supply issues.
The company in recent years has taken steps to turn things around, shedding lower-margin or unprofitable businesses and focusing on a smaller number of core competencies.
The work paid off in the most recent quarter. Triumph earned $0.31 per share on revenue of $358.59 million in its fiscal fourth quarter ending March 31, surpassing Wall Street's $0.20 per share on revenue of $342 million estimate.
But Triumph expects to encounter additional headwinds in fiscal 2025. The company projects full-year earnings of $0.42 per share, well short of the $0.70 per share analysts had expected. Similarly, free cash flow guidance was about 36% below the consensus estimate.
Is Triumph stock a buy?
This time, the problem isn't inside Triumph. The company's weak guidance reflects ongoing issues at Boeing. With Boeing making fewer planes than it had hoped, Triumph was forced to be more conservative about sales to the aerospace giant.
For the first time in nearly a decade, things are looking up for Triumph. The company has a solid plan to improve profitability. But until there is more clarity about what is going on at Boeing, it will be hard for Triumph to get airborne.
Therefore, there is reason for value hunters to be intrigued by Triumph, but it is likely best to remain on the sidelines until the outlook is more certain.
