1-Star Price
PREMIUM
5-Star Price
PREMIUM
Economic Moat
PREMIUM
Capital Allocation
PREMIUM
Wide-moat-rated TransDigm Group posted solid fiscal second-quarter results, featuring significant increases in aftermarket bookings for nondiscretionary products. We are increasing our fair value to $564 from $553 due to the time value of money and slightly higher medium-term margin targets, though these increases are partially offset by a slightly deeper revenue trough in fiscal 2021. We see shares as fairly valued at current prices.
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.
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