TransDigm Group Hits 52-Week High - Analyst Blog


Shares of TransDigm Group Inc. ( TDG ) hit a 52-week high of $174.16 during Friday's trading session. However, the stock closed the session at $173.21, which reflects a solid yearly return of 46.8% and also compares favorably with S&P's return of 23.7%. The average trading volume for the last three months aggregated at 412,057 shares.

Despite its strong price appreciation, this Zacks Rank #1 (Strong Buy) stock still has enough fundamentals that may further drive the stock upward. The company delivered positive earnings surprises in 3 of the last 4 quarters with an average beat of 42.1%. The long-term expected earnings growth rate for this stock is 15.5% 

Growth Drivers

In Dec 2013, TransDigm Group completed the acquisition of Airborne Systems Inc from Metalmark Capital in an all-cash deal valued at approximately $250 million. The acquisition is a strategic move by TransDigm as the nature of operation of Airborne Systems, its products and commercial and military clients perfectly complement TransDigm's existing portfolio. This acquisition is expected to further strengthen the company's presence in defense markets, which is one of the primary revenue streams for TransDigm.

With respect to earnings performance, TransDigm Group's fourth-quarter fiscal 2013 adjusted earnings per share was $1.75 as compared with the Zacks Consensus Estimate of loss of 18 cents. While organic net sales in the last reported quarter rose 5.6% year over year, driven by increase in volumes from commercial original equipment manufacturer (OEM) and defense, net sales improved 16.7% year-over-year.

The company also provided a positive outlook for fiscal 2014. Adjusted earnings per share in fiscal 2014 are expected to be in the range of $7.00 to $7.32, as compared with fiscal 2013 earnings of $6.90 per share. Net sales are anticipated to be in the range of $2.1-$2.2 billion in fiscal 2014, compared with revenues of $1.9 billion in fiscal 2013.

Estimate Revisions

Over the last 7 days, 1 out of 5 estimates for 2014 have been revised upward while none of the estimates were revised lower, which led to a 0.5% rise in the Zacks Consensus Estimate to $6.56 per share. The Zacks Consensus Estimate is much lower than the company guidance.

Other Stocks to Consider

Other stocks that look promising and are worth a look now include Alliant Techsystems Inc. ( ATK ), Electronic Systems Technology Inc. ( ELST ) and Precision Orbital Sciences Corp. ( ORB ). All of these carry a Zacks Rank #1 (Strong Buy).

ALLIANT TECHSYS (ATK): Free Stock Analysis Report

ORBITAL SCIENCE (ORB): Free Stock Analysis Report

TRANSDIGM GROUP (TDG): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: ATK , ELST , ORB , TDG

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