Triumph Group (TGI) makes a wide variety of structural products for military and commercial aircraft, and designs, manufactures and retrofits a variety of aircraft components. The company serves a broad, worldwide spectrum of the aviation industry, including original equipment manufacturers of commercial, business and military aircraft and aircraft parts suppliers, as well as commercial and regional airlines and air cargo carriers.

Sales and earnings have suffered during the past 18 months because production at Boeing, Airbus and Gulfstream for older aircraft models slowed. New management is implementing a plan to downsize the company’s manufacturing operations, improve efficiency and cut costs. Several aircraft makers will begin work on new aircraft in 2017, which will provide a boost to sales for Triumph. The company also won a new contract from Raytheon.

Sales will likely slip another 4% during the next 12 months because of TGI’s ongoing downsizing. EPS will rise 5% to $4.50 spurred by management’s new plan to streamline operations throughout the company. A corporate income tax cut by the new Republican administration could propel earnings considerably higher. The company’s current tax rate is 30%.

Triumph Group reported much better results for the quarter ended March 31. Sales dropped 13% but EPS skyrocketed 114%. Management’s restructuring plan produced better than expected results. New contract wins also added sales and earnings. Triumph settled its dispute with Bombardier, which clears the way for future business between the two companies. TGI shares sell at only 7.2 times current EPS and 3.7 times cash flow, which is extremely low. Buy.

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Industry: Industrials–Aerospace & Defense; P/BV = 1.06; P/CF = 3.0

Triumph Group (TGI: Current Price 23.95) makes a wide variety of structural products for military and commercial aircraft, and designs, manufactures and retrofits a variety of aircraft components. Triumph was founded in 1993 and currently resides in Berwyn, Pennsylvania.

Sales and earnings have suffered during the past 18 months because construction of older model airplanes at major manufacturers has slowed. New management at Triumph is implementing a plan to downsize the company’s manufacturing operations, improve efficiency and cut costs. Several aircraft makers will begin work on new aircraft in 2017, which will provide a boost to sales for Triumph. The company also won a new contract from Raytheon.

TGI shares sell at only 1.06 times current book value and 3.0 times cash flow, which is extremely low. I expect TGI to double and reach my sell target of 48.44 within two years. Buy at the current price.