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TransDigm Group Inc TDG

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Morningstar’s Analysis

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TransDigm Displayed Significant Operating Leverage as the Aftermarket Recovered in Q4

Burkett Huey, CFA Equity Analyst

Analyst Note

| Burkett Huey, CFA |

Wide-moat-rated TransDigm reported solid fiscal fourth-quarter earnings as the global commercial aftermarket recovery picked up speed during the period. Revenue of $1.3 billion missed FactSet consensus by 2.8%, but adjusted EPS of $4.25 beat FactSet consensus by 14.7% as the firm received a one-time tax benefit during the period. After rolling our model into fiscal 2022, we are increasing our fair value estimate for TransDigm to $590 per share from $562 due to the time value of money and higher medium-term margin assumptions.

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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 non-aviation segment. It operates as an acquisitive holding company that targets firms with proprietary, sole-source products with substantial aftermarket content. TransDigm regularly employs financial leverage to amplify operating results.

1301 East 9th Street, Suite 3000
Cleveland, OH, 44114
T +1 216 706-2960
Sector Industrials
Industry Aerospace & Defense
Most Recent Earnings Sep 30, 2021
Fiscal Year End Sep 30, 2022
Stock Type Cyclical
Employees 13,300