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TransDigm Group Inc TDG

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Morningstar’s Analysis

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1-Star Price

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5-Star Price

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Economic Moat

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Capital Allocation

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TransDigm Reports Difficult Q1, but Commercial Aftermarket Bookings Starting to Improve; FVE $553

Burkett Huey, CFA Equity Analyst

Analyst Note

| Burkett Huey, CFA |

Wide-moat-rated TransDigm Group reported first-quarter 2021 earnings that reflected continued challenges in commercial aerospace and stability in defense. Adjusted diluted earnings per share declined by 59.4% to $1.97 and narrowly beat FactSet consensus estimates. We’re raising our fair value estimate by 2.8% to $553 per share to reflect value creation from the Cobham Aero Connectivity acquisition and the time value of money, though these increases are partially offset by a slightly lower organic commercial aerospace revenue forecast. We view shares as roughly fairly valued.  

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Company Profile

Business Description

TransDigm manufactures and services a diverse set of components for commercial and military aircraft. The firm organizes itself in three segments, a power and control segment, an airframe segment, and a small nonaviation segment. The firm operates as an acquisitive holding company that targets firms with proprietary, sole-source products with substantial aftermarket content. The firm regularly employs financial leverage to amplify operating results.

Contact
1301 East 9th Street, Suite 3000
Cleveland, OH, 44114
T +1 216 706-2960
Sector Industrials
Industry Aerospace & Defense
Most Recent Earnings Dec 31, 2020
Fiscal Year End Sep 30, 2021
Stock Type Cyclical
Employees 14,200

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