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TriMas Rides on Stable Orders, Hurricane Impact to Dent Q4

Zacks
On Jan 5, we issued an updated research report on TriMas Corporation (TRS). The company’s upcoming fourth-quarter results will be hampered by the impact of Hurricane Harvey, currency volatility and uncertainty in the macroeconomic environment as well as escalating steel and resin prices. However, we believe going forward, TriMas will gain from stable order patterns, investment in new products and focus on improving manufacturing footprint.
Due to the Hurricane Harvey, TriMas’ Lamons business idled six Gulf Coast branch locations and Houston main production facility for several days. A number of its customers' locations remained closed for much longer than expected due to prolonged equipment repairs. The hurricane largely led to production inefficiencies and increased off-standard costs given the overall disruption to operations. A secondary impact related to the idling of petrochemical facilities in the Gulf region resulted in resin pricing spiking sharply. Separately, another natural disaster impacted operations at one of TriMas’ facilities. The tragic fires in Northern California resulted in the Rieke team having to stop production at its Rohnert Park facility for about a week. Consequently, the company expects modest loss of production and inefficiencies in the fourth quarter.
Further, steel prices have been increasing all year. Steel is the main input material to produce high-pressure cylinders, consequently, this is impacting Norris business. Particularly, TriMas experienced significantly elevated costs for coiled steel utilized in the manufacture of small high-pressure and acetylene cylinders in the third quarter further compressing margins. The company anticipates these steel costs and sales mix trends to continue into fourth-quarter 2017. As it is, TriMas’ fourth quarter is typically the lowest sales and profit quarter, given lower levels of production activity due to holidays and year-end customer shutdowns.
Nevertheless, the company continues to see more stable order patterns from customers in the Aerospace segment and is optimistic that more consistent demand level will result in further opportunity for improved manufacturing efficiencies over time. It also continues to make progress improving the operational performance of plants. In its Packaging segment, TriMas continues to invest in new products and remains focused on sales initiatives to drive sustainable, long-term growth in this business.
Meanwhile, the company remains committed to exploring actions to improve manufacturing footprint and strategies to drive long-term success. It recently closed the sale of Mexico City facility. Following relocation to a new facility in San Miguel, TriMas immediately began marketing the old facility to secure a nice disposition. Additionally, the company is evaluating strategic options related to one of Lamons' branch manufacturing locations in Asia. TriMas is also in the process of exiting a location in Tulsa to further reduce 2018 infrastructure costs in Arrow Engine business.
TriMas currently carries a Zacks Rank #3 (Hold).
Share Price Performance
In the last six months, TriMas has outperformed the industry with respect to price performance. The stock gained around 26.8%, while the industry recorded growth of 9.9%.
Stocks That Warrant a Look
Some better-ranked stocks in the same sector include Deere & Company, Sun Hydraulics Corporation (SNHY) and Caterpillar Inc. (CAT).
Deere has delivered an average positive earnings surprise of 19.52% in the trailing four quarters. Its shares have gained 52% in the past year. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Sun Hydraulics, another Zacks Rank #1 stock, has an average positive earnings surprise of 9.58% in the trailing four quarters. Its shares have rallied 71% in the past year.
Caterpillar, carries a Zacks Rank #2 (Buy) and has an average positive earnings surprise of 53.06% in the trailing four quarters. Its shares have gained 75% in the past year.
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On Jan 5, we issued an updated research report on TriMas Corporation TRS. The company’s upcoming fourth-quarter results will be hampered by the impact of Hurricane Harvey, currency volatility and uncertainty in the macroeconomic environment as well as escalating steel and resin prices. However, we believe going forward, TriMas will gain from stable order patterns, investment in new products and focus on improving manufacturing footprint.
Due to the Hurricane Harvey, TriMas’ Lamons business idled six Gulf Coast branch locations and Houston main production facility for several days. A number of its customers' locations remained closed for much longer than expected due to prolonged equipment repairs. The hurricane largely led to production inefficiencies and increased off-standard costs given the overall disruption to operations. A secondary impact related to the idling of petrochemical facilities in the Gulf region resulted in resin pricing spiking sharply. Separately, another natural disaster impacted operations at one of TriMas’ facilities. The tragic fires in Northern California resulted in the Rieke team having to stop production at its Rohnert Park facility for about a week. Consequently, the company expects modest loss of production and inefficiencies in the fourth quarter.
Further, steel prices have been increasing all year. Steel is the main input material to produce high-pressure cylinders, consequently, this is impacting Norris business. Particularly, TriMas experienced significantly elevated costs for coiled steel utilized in the manufacture of small high-pressure and acetylene cylinders in the third quarter further compressing margins. The company anticipates these steel costs and sales mix trends to continue into fourth-quarter 2017. As it is, TriMas’ fourth quarter is typically the lowest sales and profit quarter, given lower levels of production activity due to holidays and year-end customer shutdowns.
Nevertheless, the company continues to see more stable order patterns from customers in the Aerospace segment and is optimistic that more consistent demand level will result in further opportunity for improved manufacturing efficiencies over time. It also continues to make progress improving the operational performance of plants. In its Packaging segment, TriMas continues to invest in new products and remains focused on sales initiatives to drive sustainable, long-term growth in this business.
Meanwhile, the company remains committed to exploring actions to improve manufacturing footprint and strategies to drive long-term success. It recently closed the sale of Mexico City facility. Following relocation to a new facility in San Miguel, TriMas immediately began marketing the old facility to secure a nice disposition. Additionally, the company is evaluating strategic options related to one of Lamons' branch manufacturing locations in Asia. TriMas is also in the process of exiting a location in Tulsa to further reduce 2018 infrastructure costs in Arrow Engine business.
TriMas currently carries a Zacks Rank #3 (Hold).
Share Price Performance


In the last six months, TriMas has outperformed the industry with respect to price performance. The stock gained around 26.8%, while the industry recorded growth of 9.9%.
Stocks That Warrant a Look
Some better-ranked stocks in the same sector include Deere & Company DE, Sun Hydraulics Corporation SNHY and Caterpillar Inc. CAT.
Deere has delivered an average positive earnings surprise of 19.52% in the trailing four quarters. Its shares have gained 52% in the past year. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Sun Hydraulics, another Zacks Rank #1 stock, has an average positive earnings surprise of 9.58% in the trailing four quarters. Its shares have rallied 71% in the past year.
Caterpillar, carries a Zacks Rank #2 (Buy) and has an average positive earnings surprise of 53.06% in the trailing four quarters. Its shares have gained 75% in the past year.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.

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