Company Reports

TransDigm Group operates as a holding company with a clear, consistent strategy: acquire businesses that supply proprietary and highly engineered aircraft components with high aftermarket content. TransDigm’s businesses manufacture and sell replacement parts for aircraft, like ignition systems, pumps, actuators, flight controls, and cabin equipment, among other things. Since TransDigm is the only provider of many such products, the company has significant pricing power. The firm also operates with a high degree of financial leverage to amplify operating results.

TransDigm's first-quarter fiscal 2024 results once again demonstrated how well this wide-moat manufacturer of specialty aircraft parts is faring with the postpandemic rebound in aircraft utilization and manufacturing. We have increased our fair value estimate approximately 1% to $1,000 per share from $990. This represents 28 times our fiscal 2024 earnings estimate and 21 times our estimate of 2024 adjusted EBITDA.

TransDigm Group operates as a holding company with a clear, consistent strategy: acquire businesses that supply proprietary and highly engineered aircraft components with high aftermarket content. TransDigm’s businesses manufacture and sell replacement parts for aircraft, like ignition systems, pumps, actuators, flight controls, and cabin equipment, among other things. Since TransDigm is the only provider of many such products, the company has significant pricing power. The firm also operates with a high degree of financial leverage to amplify operating results.

TransDigm Group operates as a holding company with a clear, consistent strategy: acquire businesses that supply proprietary aircraft components with high aftermarket content. TransDigm’s businesses manufacture and sell replacement parts for aircraft, like ignition systems, pumps, actuators, flight controls, and cabin equipment, among other things. Since TransDigm is the only provider of many of their products, the company has significant pricing power. The firm also operates with a high degree of financial leverage to amplify operating results.

TransDigm's fiscal 2023 results and expectations for more double-digit growth in 2024 and beyond outstripped our expectations for how quickly this wide-moat manufacturer of specialty aircraft parts is raising sales and profits with the rebound in aircraft utilization and manufacturing. We have increased our forecast of its profitable participation in the ongoing rebounds in its key markets and increased our fair value estimate approximately 21% to $920 per share from $760. This represents 33 times our fiscal 2024 earnings estimate and 18 times our estimate of 2024 EBITDA.

TransDigm Group operates as a holding company with a clear, consistent strategy: acquire businesses that supply proprietary aircraft components with high aftermarket content. TransDigm’s businesses manufacture and sell replacement parts for aircraft, like ignition systems, pumps, actuators, flight controls, and cabin equipment, among other things. Since TransDigm is the only provider of many of their products, the company has significant pricing power. The firm also operates with a high degree of financial leverage to amplify operating results.

After TransDigm reported third-quarter results and revised its expectations for 2023 upward somewhat, we forecast accelerated revenue and profit growth in the near term and have increased our fair value estimate to $760 per share from $730, primarily reflecting rapid sales of aftermarket parts that drove impressive margin expansion at this wide-moat business. Overall, commercial air travel is rebounding almost to 2019 levels, and with Chinese air travel restarting earlier in 2023, TransDigm has seen more demand than expected for its portfolio of service parts.

TransDigm Group operates as a holding company with a clear, consistent strategy: acquire businesses that supply proprietary aircraft components with high aftermarket content. TransDigm’s businesses manufacture and sell replacement parts for aircraft, like ignition systems, pumps, actuators, flight controls, and cabin equipment, among other things. Since TransDigm is the only provider of many of their products, the company has significant pricing power. The firm also operates with a high degree of financial leverage to amplify operating results.

After TransDigm reported second-quarter results, we forecast accelerated revenue and profit growth in the near term and have increased our fair value estimate to $730 per share from $700, primarily reflecting the company's runway for continued investment and impressive margin expansion at this wide-moat business.

TransDigm Group operates as a holding company with a clear, consistent strategy: acquire businesses that supply proprietary aircraft components with high aftermarket content. TransDigm’s businesses manufacture and sell replacement parts for aircraft, like ignition systems, pumps, actuators, flight controls, and cabin equipment, among other things. Since TransDigm is the only provider of many of their products, the company has significant pricing power. The firm also operates with a high degree of financial leverage to amplify operating results.

After taking a fresh look at TransDigm and reviewing our long-term assumptions, we have increased our fair value estimate to $700 per share from $663, primarily reflecting the company's runway for continued investment and gradual margin expansion. We reaffirm the company's wide economic moat and stable moat trend ratings.

TransDigm Group operates as a holding company with a clear, consistent strategy: acquire businesses that supply proprietary aircraft components with high aftermarket content. TransDigm’s businesses manufacture and sell replacement parts for aircraft, like ignition systems, pumps, actuators, flight controls, and cabin equipment, among other things. Since TransDigm is the only provider of many of their products, the company has significant pricing power. The firm also operates with a high degree of financial leverage to amplify operating results.

TransDigm Group operates as a holding company with a clear, consistent strategy: acquire businesses with proprietary aircraft components, primarily sole-source products, with high aftermarket content. TransDigm’s businesses manufacture and sell replacement parts for ignition systems, pumps, actuators, and flight controls, among other things. Since aircraft must be fully maintained to be operational and TransDigm is the only provider of many of their products, the company has significant pricing power. The firm operates with a high degree of financial leverage to amplify operating results.

Wide-moat-rated TransDigm posted strong fiscal first-quarter results due to continued strength in commercial air traffic. Revenue of $1.4 billion and adjusted EPS of $4.58 each modestly outpaced FactSet consensus. Management slightly raised its fiscal 2023 outlook for sales and adjusted EBITDA to reflect further sequential improvement in air traffic demand throughout the year, led by international activity. We are encouraged by the rebound in commercial air travel demand and by indications of strong order flow from the defense sector. We are raising our DCF-derived fair value estimate by 2% to $663 per share as we boosted our sales forecast slightly due to the firm's more favorable 2023 outlook.

TransDigm Group operates as a holding company with a clear, consistent strategy: acquire businesses with proprietary aircraft components, primarily sole-source products, with high aftermarket content. TransDigm’s businesses manufacture and sell replacement parts for ignition systems, pumps, actuators, and flight controls, among other things. Since aircraft must be fully maintained to be operational and TransDigm is the only provider of many of their products, the company has significant pricing power. The firm operates with a high degree of financial leverage to amplify operating results.

Wide-moat Transdigm delivered strong fiscal fourth-quarter results amid continued recovery in commercial aerospace activity. Revenue of $1.5 billion was in line with FactSet consensus, while adjusted EPS of $5.50 outpaced consensus by 5%. Management established fiscal 2023 guidance, calling for revenue of $6.0 billion-$6.2 billion and EBITDA of $3.0 billion-$3.1 billion, which came in slightly above our expected run rate. We expect to maintain our $650 per share fair value estimate as our long-term outlook remains intact.

TransDigm Group operates as a holding company with a clear, consistent strategy: acquire businesses with proprietary aircraft components, primarily sole-source products, with high aftermarket content. TransDigm’s businesses manufacture and sell replacement parts for ignition systems, pumps, actuators, and flight controls, among other things. Since aircraft must be fully maintained to be operational and TransDigm is the only provider of many of their products, the company has significant pricing power. The firm operates with a high degree of financial leverage to amplify operating results.

TransDigm Group operates as a holding company with a clear, consistent strategy: acquire businesses with proprietary aircraft components, primarily sole-source products, with high aftermarket content. TransDigm’s businesses manufacture and sell replacement parts for ignition systems, pumps, actuators, and flight controls, among other things. Since aircraft must be fully maintained to be operational and TransDigm is the only provider of many of their products, the company has significant pricing power. The firm operates with a high degree of financial leverage to amplify operating results.

Wide-moat-rated TransDigm posted continued revenue growth and strong margins as the high-margin commercial aftermarket continues to recover with increased commercial flight activity. Revenue of $1.4 billion missed FactSet consensus estimates by 0.4%, but adjusted earnings per share of $4.85 beat these same estimates by 10.6%. After adjusting our model with fiscal third-quarter earnings, we are increasing our fair value estimate for TransDigm to $650 per share from $640 as the effect of the time value of money was partially offset by lower acquisition spend assumptions.

TransDigm Group operates as a holding company with a clear, consistent strategy: acquire businesses with proprietary aircraft components, primarily sole-source products, with high aftermarket content. TransDigm’s businesses manufacture and sell replacement parts for ignition systems, pumps, actuators, and flight controls, among other things. Since aircraft must be fully maintained to be operational and TransDigm is the only provider of many of their products, the company has significant pricing power. The firm operates with a high degree of financial leverage to amplify operating results.