On Dec 19, we upgraded our recommendation on aircraft
TransDigm Group Incorporated
) to Neutral based on its improved earnings prospects. This
leading designer, producer and supplier of highly engineered
aircraft components has been witnessing rising earnings estimates
on the back of strong fiscal fourth-quarter 2013 results, an
improved fiscal 2014 guidance and positive synergies from
Why the Upgrade?
On Nov 15, TransDigm reported fourth-quarter fiscal 2013
adjusted earnings per share of $1.75, which stormed past the
Zacks Consensus Estimate of loss of 18 cents. The company's
revenues in the quarter were $539.7 million, reflecting a
year-over-year increase of 16.7%. Organic net sales also grew
5.6% from the prior-year period, driven by increase in volumes
from commercial original equipment manufacturer (OEM) and
Following the release of fourth-quarter results, the Zacks
Consensus Estimate for fiscal 2014 has increased 0.6% to $6.53
per share. Moreover, the Zacks Consensus Estimate for
first-quarter 2014 has also increased marginally from $1.61 to
$1.62 per share.
The company has made a number of strategic acquisitions in the
quarter that include Arkwin, AmSafe, Aerosonic and Whippany and
has successfully integrated businesses. Recently, the company
completed the acquisition of Airborne Systems Inc from Metalmark
Capital, in an all-cash deal valued at approximately $250
Furthermore, its financial performance continues to reflect
the ability of its proven operating strategy to consistently
create real intrinsic value for shareholders. The company's
strong free cash flow and well-planned capital structure will
also likely enhance shareholder value.
Other Stocks to Consider
TransDigm currently has a Zacks Rank #3 (Hold). Some
better-ranked stocks in the aerospace sector include
Alliant Techsystems Inc
B/E Aerospace Inc.
Precision Castparts Corp.
). While Alliant Techsystems carries a Zacks Rank #1 (Strong
Buy), B/E Aerospace and Precision Castparts holds a Zacks Rank #2
ALLIANT TECHSYS (ATK): Free Stock Analysis
B/E AEROSPACE (BEAV): Free Stock Analysis
PRECISION CASTP (PCP): Free Stock Analysis
TRANSDIGM GROUP (TDG): Free Stock Analysis
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