Why Triumph Group shares fell this week

Issues with various clients are likely to influence The Triumph Grouphis (TGI 4.31%) results in the coming quarters, a new hurdle for the long-suffering aerospace supplier.

Investors are not in the mood to wait for delays. Triumph shares traded up 12% for the week as of 2pm on Thursday, according to data from S&P Global Market Intelligence.

Loads forward

Triumph is a collection of aerospace companies that have underperformed over the years, causing the stock to lose nearly 80% of its value over the past decade. However, the company is under new management and has shed most of the units that weighed on results. It was starting to look like a promising comeback story.

Triumph lost $0.06 per share in its fiscal first quarter, which ended June 30, on revenue of $281 million. The loss was a penny more than expected, but revenue topped $12 million. It was also the company’s ninth consecutive quarter of year-over-year sales growth, reflecting strong demand for commercial aerospace parts.

Investors are more focused on what’s next. Triumph said it expects to use between $70 million and $90 million in cash in the current quarter, after previously forecasting a quarter near break-even in terms of free cash. About $60 million of the difference is added to net working capital due to issues with Boeingits 737 ramp, reductions in engine deliveries and lower military revenue due to supplier issues.

All of these problems should be short-term in nature, but the guide was a reminder of what can go wrong.

Is the Triumph a buy?

Triumph is much healthier than it was a few years ago. The company expects to report fiscal 2025 earnings of $0.52 per share, slightly above Wall Street estimates, and expects free cash flow to increase as the fiscal year continues.

There are other potential storm clouds that investors should be aware of. Boeing’s upcoming labor negotiations could throw a wrench in the recovery or cause the aerospace giant to rethink growth plans.

However, the long-term trends for aerospace demand are positive and, for the first time in recent history, Triumph is well positioned to benefit from these trends. For those eyeing the 2025 calendar and beyond, there is reason to be excited about the Triumph Group.