With a market cap of $73.5 billion, TransDigm Group Incorporated (TDG) is a leading U.S. aerospace manufacturer headquartered in Cleveland, Ohio. It designs and supplies proprietary, highly engineered aircraft components across commercial and military markets, organized into Power & Control, Airframe, and Non-Aviation segments.
Companies worth more than $10 billion are generally labeled as “large-cap” stocks and TransDigm Group fits this criterion perfectly. With strong aftermarket exposure, pricing power, and an acquisition-driven growth strategy, TransDigm generates high margins and resilient cash flows, though it has faced scrutiny over its pricing practices.
However, TDG shares have retreated 21.3% from their 52-week high of $1,623.82. TransDigm Group’s shares have risen 12.2% over the past three months, outperforming the broader Nasdaq Composite’s ($NASX) 10.8% rise over the same time frame.
TDG stock is up marginally on a YTD basis, trailing the $NASX’s 11.3% rise. Moreover, shares of the aircraft components maker have decreased 4.1% over the past 52 weeks, underperforming $NASX’s 25.5% over the same time frame.
The stock has been trading above its 200-day moving average since late April, but has dipped below its 50-day moving average since early August.
On Aug. 5, TransDigm Group released its Q3 results and its shares slumped 11.9% in the next trading session. Despite delivering healthy year-over-year growth, results came in below expectations. Quarterly net sales rose 9.3% to $2.2 billion but fell short of estimates by 2.6%. Margin pressures weighed on profitability, with adjusted EPS increasing 6.7% to $9.60, missing the consensus by a wider gap.
TDG has significantly lagged behind its rival, GE Aerospace (GE). GE stock has soared 68% over the past 52 weeks and 65.4% on a YTD basis.
Despite the stock’s weak performance over the past year, analysts remain highly bullish on TDG. The stock has a consensus rating of “Strong Buy” from the 23 analysts covering the stock. Its mean price target of $1,619.82 implies an upswing potential of 26.7% from the current market prices.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
