TransDigm Group (TDG) delivered fiscal third-quarter results that ended July 3, 2021. The results were characterized by a year-over-year increase in revenue and earnings. While the COVID-19 pandemic unfavorably impacted the results, signs of a recovery in the broader aerospace industry are encouraging.
Net sales were up 19.2% year-over-year to $1.22 billion, in line with consensus estimates of $1.22 billion. The increase was driven by a 15.1% increase in organic sales, and the company posted $42 million in net acquisition and divestiture sales growth. (See TransDigm stock charts on TipRanks)
TransDigm Group also registered a 120.5% year-over-year increase in adjusted net income of $194 million. Consequently, earnings per share came in at $3.33, above consensus estimates of $2.93 a share.
CEO Kevin Stein stated, “I am very pleased that we continue to sequentially expand our EBITDA As Defined margin as a result of continued recovery in our commercial aftermarket revenues as well as careful management of our cost structure and focus on our operating strategy in this challenging commercial environment.”
The company has not issued any guidance for the year, citing considerable uncertainty owing to the COVID-19 pandemic that continues to impact operations.
TransDigm Group completed the divestment of the Technical Airborne Components business, ScioTeq, and TREALITY Simulation Visual Systems during the quarter for a net gain of $68 million.
Additionally, TransDigm has confirmed the transition of W. Nicholas Howley from Executive Chairman to Non-Executive Chairman of the board.
Following the Q3 results, Cowen & Co. analyst Gautam Khanna reiterated a Buy rating on the stock with a $650 price target, implying 4.67% upside potential to current levels.
“June Q EPS was above Street on lower tax rate and better margin, and commercial aero aftermarket sales improved sequentially,” states Khanna.
Consensus among analysts is a Strong Buy based on 8 Buys and 1 Hold. The average TransDigm price target of $705.22 implies 13.56% upside potential to current levels.
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