Should TransDigm (TDG) Stock Be in Your Portfolio Now?
Zacks Investment Research upgraded TransDigm Group Incorporated (TDG), a leading aircraft components provider, to a Zacks Rank #1 (Strong Buy) on Sep 23.
Why the Upgrade?
Estimates for TransDigm Group have been increasing since the company reported solid third-quarter fiscal 2014 results on Aug 5. Adjusted earnings of $1.94 per share surpassed the Zacks Consensus Estimate of $1.66 by 16.9%. Moreover, the bottom line improved 10.7% from the prior-year quarter figure of $1.50 per share. Following the earnings release, the company’s shares have gained around 10.1% so far.
TransDigm Group is a leading global designer, producer and supplier of highly engineered aircraft components for use in nearly all commercial and military aircrafts. The company offers a broad range of products to its customers through its well-diversified business. More than 90% of TransDigm Group’s net sales are generated by proprietary aerospace products, for which it owns the design. In addition, the company generates approximately 75% of its net sales from products, for which it is the sole resource provider.
A significant portion of the company’s revenues is generated from aftermarket. Over the life of any particular aircraft, which is about 30 years, the company is able to generate net sales from aftermarket consumption. As much as 54% of the company’s revenues are derived from the after-market sales, mainly from the commercial and military aftermarket.
The company has been benefiting from its strategic acquisitions in fiscal 2013. Further, ongoing improvement in the commercial aftermarkets and strength in commercial aerospace business are fueling its growth.
The Zacks Consensus Estimate has increased 12% to $7.27 per share for 2014 driven by the positive estimate revisions over the past 60 days.
Other Stocks to Consider
Other stocks in the same industry that look promising at the moment include B/E Aerospace Inc. (BEAV), GenCorp Inc. (GY) and Curtiss-Wright Corp. (CW). All three stocks carry a Zacks Rank #2 (Buy).
Read the Full Research Report on TDG
Read the Full Research Report on CW
Read the Full Research Report on BEAV
Read the Full Research Report on GY
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