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TriMas (TRS) Rides on Robust Demand for Packaging & Buyouts

Zacks Equity Research
·4 mins read

On Aug 12, we issued an updated research report on TriMas Corporation TRS. The company is advancing well with TriMas Business Model that aims to improve the performance of its businesses. It is poised to gain from elevated demand for packaging in the near term. A solid pipeline of product and process innovation and acquisitions, aided by a healthy balance sheet, will also drive growth.

TriMas reported revenues of $200 million in second-quarter 2020, reflecting a year-over-year increase of 4.6% on record sales in the Packaging segment and recent acquisitions. Adjusted earnings came in at 43 cents per share, flat year over year.

Strong Demand in Packaging to Aid Growth

TriMas serves a diverse set of end markets, which will help the company tide over the current coronavirus crisis. Its Packaging group manufactures dispensers and closures, which are utilized in applications that help fight the spread of germs, improve personal hygiene, and for home and industrial cleaning, and food and beverage, pharmaceutical and nutraceutical, as well as industrial applications. Demand for these products has been strong even amid the coronavirus pandemic. The segment’s sales are expected to be up 15-20% in the second half of 2020 driven by stellar demand for these products.

TriMas is also witnessing surging demand for personal care and home care products and intends to increase the capacity globally in order to meet customer requirements. Further, the Specialty Products group supplies steel cylinders, which are utilized for compressed gases in medical oxygen applications. These cylinders have been witnessing robust demand, of late.

Growth Drivers in Place

In the wake of the uncertain market conditions amid the pandemic, the company is taking steps to slash costs. This includes managing capital expenditures, reducing third party expenses and making temporary pay reductions.

Meanwhile, TriMas continues to focus on leveraging the TriMas Business Model, which was implemented in late 2016 to improve the management and performance of businesses. Further, the company has a strong pipeline of both product and process innovation that will drive long-term growth. This also positions its businesses well to capitalize on market prospects and minimize market disruptions.

Since 2019, TriMas has acquired Plastic Srl, Taplast, RSA Engineered Products and the Rapak brand, including certain bag-in-box product lines and assets from Liqui-Box. Taking all of these acquisitions into account, TriMas’ annual sales will go up to $800 million, with more than 80% of sales coming in from Packaging and Aerospace markets. It has a robust pipeline of potential M&A in the Packaging and Aerospace segments.

Even after acquisitions and share repurchases, the company’s total debt to total capital ratio was 0.33 as of Jun 30, 2020. TriMas ended second-quarter 2020 with $349.4 million of cash and aggregate availability under its revolving credit facility and $65.3 million of cash on hand. Its strong balance sheet and track record of solid cash-flow generation poise it well to sail through the crisis, as it provides both ample capacity and flexibility to fund capital-allocation priorities.

Share Price Performance

Shares of TriMas have gained 33.9% over the past three months, compared with the industry’s growth of 51.4%.

Zacks Rank & Other Stocks to Consider

TriMas carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the Industrial Products sector include Silgan Holdings, Inc. SLGN, IIVI Incorporated IIVI and SiteOne Landscape Supply, Inc. SITE. While Silgan and IIVI Incorporated sport a Zacks Rank #1 (Strong Buy), SiteOne Landscape carries a Zacks Rank #2 at present. You can see the complete list of today's Zacks #1 Rank stocks here.

Silgan has a projected earnings growth rate of 28.7% for the current year. The company’s shares have gained 16% in the past three months.

IIVI has an estimated earnings growth rate of 29% for the ongoing year. The company’s shares have rallied 16% in three months’ time.

SiteOne Landscape Supply has an expected earnings growth rate of 6.2% for 2020. The stock has appreciated 39% over the past three months.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>


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Silgan Holdings Inc. (SLGN) : Free Stock Analysis Report
 
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