Transdigm Group (TDG) AI Stock Analysis

• Market Cap: $72.99B
• Dividend Yield: N/A
• Average Volume (3M): 366.50K
• Price to Earnings (P/E): 43.0
• Beta (1Y): 0.89
• Revenue Growth: 12.86%
• EPS Growth: 11.44%
• Country: US
• Employees: 16,600
• Sector: Industrials
• Sector Strength: 72
• Industry: Aerospace & Defense
• EPS (TTM): 9.60
• Shares Outstanding: 56,350,285
• 10 Day Avg. Volume: 422,066
• 30 Day Avg. Volume: 366,498
• PEG Ratio: 3.42
• Price to Book (P/B): -13.11
• Price to Sales (P/S): 10.39
• P/FCF Ratio: 43.88
• Enterprise Value/Market Cap: 1.50
• Enterprise Value/Revenue: 12.75
• Enterprise Value/Gross Profit: 22.08
• Enterprise Value/Ebitda: 25.18
• 1Y Price Target: $1,606.19
• Price Target Upside: 23.61% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 17

• Rating: 64 Neutral
• Price Target: $1,390.00 ▲(6.97% Upside)

Transdigm Group's strong financial performance and strategic growth efforts are offset by high leverage and valuation concerns. The earnings call provided a balanced view, with robust EBITDA margins and cash flow countered by challenges in the commercial OEM segment.

Positive Factors

Strong EBITDA Margin

The robust EBITDA margin underscores Transdigm's effective cost management and strategic focus, enhancing long-term profitability and operational resilience.

Cash Flow Generation

Strong cash flow generation provides Transdigm with the flexibility to invest in growth opportunities and manage debt, supporting sustainable financial health.

Successful M&A Activity

Strategic acquisitions enhance product offerings and market position, driving revenue growth and competitive advantage in the aerospace sector.

Negative Factors

High Leverage

High leverage poses financial risks, potentially limiting flexibility and increasing vulnerability to economic downturns, impacting long-term stability.

Commercial OEM Revenue Decline

Declining OEM revenue reflects challenges in production rates, which could hinder growth prospects and affect market positioning in the aerospace industry.

Lowered Sales Guidance

Reduced sales guidance indicates potential revenue pressures, suggesting challenges in meeting market demand and affecting future financial performance.

Transdigm Group Business Overview & Revenue Model

Company Description

TransDigm Group Incorporated designs, produces, and supplies aircraft components in the United States and internationally. Its Power & Control segment offers mechanical/electro-mechanical actuators and controls, ignition systems and engine technology, specialized pumps and valves, power conditioning devices, specialized AC/DC electric motors and generators, batteries and chargers, databus and power controls, sensor products, switches and relay panels, hoists, winches and lifting devices, and cargo loading and handling systems. This segment serves engine and power system and subsystem suppliers, airlines, third party maintenance suppliers, military buying agencies, and repair depots. The company's Airframe segment provides engineered latching and locking devices, engineered rods, engineered connectors and elastomer sealing solutions, cockpit security components and systems, cockpit displays, engineered audio, radio and antenna systems, lavatory components, seat belts and safety restraints, engineered and customized interior surfaces and related components, thermal protection and insulation products, lighting and control technology, and parachutes. This segment serves airframe manufacturers, cabin system and subsystem suppliers, airlines, third party maintenance suppliers, military buying agencies, and repair depots. Its Non-aviation segment offers seat belts and safety restraints for ground transportation applications; electro-mechanical actuators for space applications; hydraulic/electromechanical actuators and fuel valves for land-based gas turbines; refueling systems for heavy equipment used in mining, construction, and other industries; and turbine controls for the energy and oil and gas markets. This segment serves off-road vehicle and subsystem suppliers, child restraint system suppliers, and satellite and space system suppliers; and manufacturers of heavy equipment. TransDigm Group Incorporated was founded in 1993 and is based in Cleveland, Ohio.

How the Company Makes Money

Transdigm Group generates revenue primarily through the sale of its proprietary aerospace components to original equipment manufacturers (OEMs) and aftermarket services. The company's revenue model is structured around both new part sales and aftermarket support, with a significant portion of earnings derived from long-term contracts and maintenance, repair, and overhaul (MRO) services. Key revenue streams include the sale of components used in aircraft production and the ongoing maintenance of existing aircraft fleets. Additionally, Transdigm benefits from strong relationships with major aerospace manufacturers and defense contractors, which provide a stable customer base and contribute to recurring revenue through aftermarket services. The company's focus on high-margin products and strategic acquisitions further enhances its profitability and market position.

Transdigm Group Financial Statement Overview

Summary

Transdigm Group demonstrates strong profitability and cash flow generation, crucial for sustaining operations and growth. However, high leverage and negative equity pose financial risks, impacting the overall financial performance score.

Income Statement

Transdigm Group shows strong profitability with a consistent increase in revenue and margins over the years. The TTM data reveals a gross profit margin of 57.7% and a net profit margin of 20.4%, indicating efficient cost management and strong bottom-line performance. Revenue growth is steady at 2.3% TTM, reflecting resilience in the aerospace and defense sector.

Balance Sheet

The balance sheet highlights significant leverage with a negative stockholders' equity, resulting in a high debt-to-equity ratio of -5.0 TTM. This indicates potential financial risk, although the company has managed to maintain operations effectively. Return on equity is negative, reflecting the impact of high debt levels on shareholder returns.

Cash Flow

Cash flow analysis shows robust free cash flow growth of 26.3% TTM, supporting operational flexibility. The operating cash flow to net income ratio is strong at 0.95, suggesting efficient cash generation relative to earnings. The free cash flow to net income ratio of 0.91 further underscores the company's ability to convert profits into cash.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	8.58B	7.94B	6.58B	5.44B	4.80B	5.11B
Gross Profit	4.95B	4.56B	3.75B	2.94B	2.42B	2.55B
EBITDA	4.34B	3.87B	3.20B	2.46B	2.06B	2.08B
Net Income	1.75B	1.48B	1.26B	780.00M	607.00M	474.00M
Balance Sheet
Total Assets	22.70B	25.59B	19.97B	18.11B	19.32B	18.39B
Cash, Cash Equivalents and Short-Term Investments	2.79B	6.26B	3.47B	3.00B	4.79B	4.72B
Total Debt	25.01B	24.90B	19.77B	19.81B	20.02B	20.03B
Total Liabilities	27.70B	31.87B	21.95B	21.87B	22.23B	22.36B
Stockholders Equity	-5.00B	-6.29B	-1.98B	-3.77B	-2.92B	-3.97B
Cash Flow
Free Cash Flow	1.91B	1.88B	1.24B	829.00M	808.00M	1.11B
Operating Cash Flow	2.10B	2.04B	1.38B	948.00M	913.00M	1.21B
Investing Cash Flow	-1.05B	-2.44B	-900.00M	-553.00M	-785.00M	799.00M
Financing Cash Flow	-1.65B	3.17B	-16.00M	-2.15B	-70.00M	1.23B

Transdigm Group Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 1299.37
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TDG, the sentiment is Positive. The current price of 1299.37 is above the 20-day moving average (MA) of 1292.37, below the 50-day MA of 1359.11, and above the 200-day MA of 1299.17, indicating a neutral trend. The MACD of -14.67 indicates Negative momentum. The RSI at 47.84 is Neutral, neither overbought nor oversold. The STOCH value of 55.19 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TDG.

Transdigm Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
GD	79 Outperform	86.79B	21.67	17.33%	1.81%	11.85%	16.12%
NOC	77 Outperform	82.49B	21.19	25.50%	1.51%	-0.65%	77.20%
HEI	76 Outperform	38.84B	70.18	15.50%	0.07%	13.46%	33.75%
LHX	75 Outperform	53.19B	31.74	8.80%	1.66%	2.93%	43.29%
LMT	71 Outperform	112.15B	27.05	78.82%	2.71%	1.09%	-35.50%
TDG	64 Neutral	$72.99B	43.00	-29.16%	―	12.86%	11.44%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%