Transdigm Group Inc. (TDG)
NYSE:TDG
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Transdigm Group
(NYSE:TDG)
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Rating:65Neutral
Price Target:
$1,400.00
▲(21.53% Upside)
Action:DowngradedDate:02/04/26
The score is driven primarily by strong operating profitability and cash flow, tempered by a highly leveraged, negative-equity balance sheet. The latest earnings call adds support via raised FY2026 guidance and strong liquidity, while technicals are weak (price below major moving averages) and valuation remains expensive (P/E ~41.9).
Positive Factors
High margins and profitability
TransDigm’s sustained TTM gross (~60%), operating (~35%) and net (~22%) margins reflect durable pricing power from proprietary aerospace components. These structurally high margins support resilience across cycles, fund reinvestment and M&A, and underpin long‑term cash returns.
Negative Factors
Highly leveraged, negative equity balance sheet
A structurally high debt load (~$29.9B) and deeply negative equity (~-$9.3B) materially reduce financial flexibility. Elevated leverage heightens refinancing and interest‑rate sensitivity, constraining options during downturns and increasing the risk that cash flow volatility will impair strategic choices.
Read all positive and negative factors
Positive Factors
Negative Factors
High margins and profitability
TransDigm’s sustained TTM gross (~60%), operating (~35%) and net (~22%) margins reflect durable pricing power from proprietary aerospace components. These structurally high margins support resilience across cycles, fund reinvestment and M&A, and underpin long‑term cash returns.
Read all positive factors
Transdigm Group (TDG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$65.05B
Dividend YieldN/A
Average Volume (3M)360.83K
Price to Earnings (P/E)49.4
Beta (1Y)0.82
Revenue Growth11.33%
EPS Growth25.37%
CountryUS
Employees16,600
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)8.23
Shares Outstanding56,473,564
10 Day Avg. Volume478,999
30 Day Avg. Volume360,829
Financial Highlights & Ratios
PEG Ratio1.47
Price to Book (P/B)-7.92
Price to Sales (P/S)8.69
P/FCF Ratio42.24
Enterprise Value/Market Cap1.41
Enterprise Value/Revenue10.08
Enterprise Value/Gross Profit17.08
Enterprise Value/Ebitda19.83
Forecast
1Y Price Target
$1,604.14Price Target Upside39.26% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering16
EPS Forecast (FY)38.86
Revenue Forecast (FY)$10.01B
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 technol...
How the Company Makes Money
Transdigm Group generates revenue through the sale of its proprietary aerospace components and systems, which are often characterized by their high margins and low manufacturing costs. The company operates on a business model that emphasizes long-...
Transdigm Group Key Performance Indicators (KPIs)
Any
Revenue by Segment
Breaks down sales figures for each business segment, indicating which parts of the company are driving growth and which may need strategic adjustments.
Breaks down sales figures for each business segment, indicating which parts of the company are driving growth and which may need strategic adjustments.
Data provided by:
The Fly
The FlyTransdigm Group Earnings Call Summary
Earnings Call Date:Feb 03, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:May 12, 2026
Earnings Call Sentiment Positive
The call conveyed predominantly positive operational and financial momentum: company results beat expectations in Q1, guidance for fiscal 2026 was raised for both sales and EBITDA, bookings and backlog were strong across channels, and cash generation and liquidity remain robust. Management reiterated disciplined capital allocation and an active M&A pipeline aligned with its high-aftermarket, proprietary-products strategy. Principal risks noted include near-term lumpiness in aftermarket due to distributor/airline inventory timing, a still-bumpy OEM production recovery, margin dilution from recent/pending acquisitions (~200 bps), and elevated leverage around ongoing M&A funding. Overall, the positives (guidance raises, strong cash flow, bookings, and strategic acquisitions) outweigh the headwinds, though execution and integration risk remain important watch items.Positive Updates
Raised Fiscal 2026 Revenue Guidance
Midpoint revenue guidance increased to $9.94 billion, representing approximately +13% year-over-year versus fiscal 2025; guidance raised $90 million at the midpoint versus prior guide.
Negative Updates
Aftermarket Growth Lagging Broader Market
Management noted TransDigm’s commercial aftermarket growth lags the broader market by roughly 5–6 percentage points over the last 12 months; about half of that gap is attributed to underexposure to engine content and the other half to 'lumpiness' in distribution/airline inventory timing.
Read all updates
Q1-2026 Updates
Positive
Negative
Raised Fiscal 2026 Revenue Guidance
Midpoint revenue guidance increased to $9.94 billion, representing approximately +13% year-over-year versus fiscal 2025; guidance raised $90 million at the midpoint versus prior guide.
Read all positive updates
Company Guidance
Management raised fiscal 2026 guidance: midpoint revenue is now $9.94 billion (≈+13% y/y) and midpoint EBITDA (defined) $5.21 billion (≈+9% y/y) implying an EBITDA margin of ~52.4%, with adjusted EPS midpoint of $38.38; the update reflects a $90 million increase to sales midpoint and a $60 million increase to EBITDA midpoint versus prior guidance and assumes no further acquisitions (pending Stellant, Jet Parts and Victor Sierra excluded). They warned of roughly 200 basis points of margin dilution from recent acquisitions and another ~0.5–1.0 percentage point dilution from commercial OEM/defense mix (Q1 EBITDA margin was 52.4% including ~2 p.p. acquisition dilution), and noted Q1 organic growth of 7.4%, Q1 operating cash flow >$830 million, Q1 free cash flow just under $900 million (full‑year free cash flow guidance unchanged at ≈$2.4 billion), quarter‑end cash >$2.5 billion, net debt/EBITDA 5.7x (targeting 5–7x), EBITDA/interest coverage 3.1x, pro‑forma M&A capacity approaching $10 billion, and market channel assumptions of commercial OEM high‑single to mid‑teens, commercial aftermarket high‑single, and defense mid‑ to high‑single digits.Transdigm Group Financial Statement Overview
Summary
Income Statement
86
Very Positive
Balance Sheet
28
Negative
Cash Flow
78
Positive
| Breakdown | TTM | Sep 2025 | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 9.11B | 8.83B | 7.94B | 6.58B | 5.43B | 4.80B |
| Gross Profit | 5.37B | 5.31B | 4.67B | 3.84B | 3.10B | 2.51B |
| EBITDA | 4.63B | 4.57B | 3.81B | 3.15B | 2.46B | 2.03B |
| Net Income | 1.97B | 2.07B | 1.71B | 1.30B | 866.00M | 680.00M |
Balance Sheet | ||||||
| Total Assets | 23.76B | 22.91B | 25.59B | 19.97B | 18.11B | 19.32B |
| Cash, Cash Equivalents and Short-Term Investments | 2.53B | 2.81B | 6.26B | 3.47B | 3.00B | 4.79B |
| Total Debt | 29.92B | 30.03B | 24.90B | 19.77B | 19.81B | 20.02B |
| Total Liabilities | 33.02B | 32.59B | 31.87B | 21.95B | 21.87B | 22.23B |
| Stockholders Equity | -9.27B | -9.69B | -6.29B | -1.98B | -3.77B | -2.92B |
Cash Flow | ||||||
| Free Cash Flow | 1.88B | 1.82B | 1.88B | 1.24B | 829.00M | 808.00M |
| Operating Cash Flow | 2.12B | 2.04B | 2.04B | 1.38B | 948.00M | 913.00M |
| Investing Cash Flow | -1.54B | -595.00M | -2.44B | -900.00M | -553.00M | -785.00M |
| Financing Cash Flow | -525.00M | -4.90B | 3.17B | -16.00M | -2.15B | -70.00M |
Transdigm Group Technical Analysis
Negative
1151.94
Price Trends
1309.95
Negative
1318.06
Negative
1333.99
Negative
Market Momentum
-43.19
Positive
27.38
Positive
15.72
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TDG, the sentiment is Negative. The current price of 1151.94 is below the 20-day moving average (MA) of 1238.45, below the 50-day MA of 1309.95, and below the 200-day MA of 1333.99, indicating a bearish trend. The MACD of -43.19 indicates Positive momentum. The RSI at 27.38 is Positive, neither overbought nor oversold. The STOCH value of 15.72 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TDG.
Transdigm Group Risk Analysis
Transdigm Group disclosed 30 risk factors in its most recent earnings report. Transdigm Group reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 2 New Risks
1.
Item 2. Unregistered sales of equity securities and use of proceeds: Purchases of equity securities by the issuer Q4, 2025
2.
Item 5. Other information Q4, 2025
Transdigm Group Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $98.21B | 19.57 | 26.50% | 1.55% | -0.14% | 72.35% | |
75 Outperform | $65.25B | 47.45 | 8.28% | 1.61% | 2.83% | 47.00% | |
74 Outperform | $96.06B | 21.58 | 17.57% | 1.73% | 11.86% | 17.39% | |
74 Outperform | $144.34B | 22.26 | 80.53% | 2.77% | 2.88% | -35.15% | |
66 Neutral | $32.61B | 60.62 | 16.85% | 0.07% | 16.26% | 33.72% | |
65 Neutral | $65.05B | 49.35 | -26.55% | ― | 11.33% | 25.37% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% |
* Industrials Sector Average
TDG
Transdigm Group
1,140.03
-154.26
-11.92%
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.