On Mar 11, 2014, we issued an updated research report on
TransDigm Group Inc.
). The company reported strong first-quarter fiscal 2014 results,
which included a 26% positive surprise. It also announced the
acquisition of proprietary aerospace business Airborne Systems in
the fiscal first-quarter 2014. The acquisitions of Whippany,
Arkwin and Aerosonic closed in previous quarters contributed
about $184.1 million to the revenues of fiscal 2013.
TransDigm Group has delivered positive earnings surprise in three
of the last four quarters, with an average beat of 35.6%.
With the first-quarter results, TransDigm raised its expectation
for fiscal 2014 to reflect its quarterly outperformance and
addition of Airborne Systems in its portfolio. The company now
projects net sales in the range of $2.28 billion to $2.34
billion, compared with the former projection of $2.1-$2.2
TransDigm also raised the outlook for fiscal 2014 net income
in the range of $375-$393 million from $372-$390 million.
Adjusted earnings per share are expected to be in the band of
$7.35 to $7.65 as against $7.00 to $7.32 guided previously.
TransDigm is favorably positioned in the aerospace market. About
90% of its revenues are generated from proprietary products and
the company is the sole provider of three fourths of the products
sold. The company's aftermarket business has proved to be stable
even amid economic downturns, as it accounted for about 54% of
revenues and a higher share of earnings before interest, taxes,
depreciation and amortization (EBITDA).
The company's financial performance reflects its ability and
commitment to enhance shareholders' value. TransDigm's strong
free cash flow and well-planned capital structure are expected to
further reward shareholders, going forward. At the quarter-end,
TransDigm had an additional capacity of $1.5 billion, which could
be used to finance more acquisitions.
TransDigm's performance led to positive estimate revisions over
the past 7 days. As a result, the Zacks Consensus Estimate for
fiscal 2014 increased 0.1% and is currently pegged at $6.61 per
share. For fiscal 2015, the Estimate rose 0.6% to $8.40,
reflecting a scope for the company's growth in the long run. The
expected long term earnings growth rate for the stock is 17.2%.
TransDigm has a Zacks Rank #2 (Buy). Other players in the
aerospace equipment manufacturing sector, which look attractive
at present, include
Alliant Techsystems Inc.
BAE Systems plc.
). All these stocks sport a Zacks Rank #1 (Strong Buy).
ALLIANT TECHSYS (ATK): Free Stock Analysis
ASTRONICS CORP (ATRO): Free Stock Analysis
BAE SYSTEMS-ADR (BAESY): Get Free Report
TRANSDIGM GROUP (TDG): Free Stock Analysis
To read this article on Zacks.com click here.