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What Should You Know About TransDigm Group Incorporated's (NYSE:TDG) Future?

Simply Wall St

Since TransDigm Group Incorporated (NYSE:TDG) released its earnings in March 2019, the consensus outlook from analysts appear somewhat bearish, with profits predicted to rise by 8.9% next year against the higher past 5-year average growth rate of 29%. Currently with trailing-twelve-month earnings of US$905m, we can expect this to reach US$986m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for TransDigm Group in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

Check out our latest analysis for TransDigm Group

How is TransDigm Group going to perform in the near future?

Over the next three years, it seems the consensus view of the 16 analysts covering TDG is skewed towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To get an idea of the overall earnings growth trend for TDG, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

NYSE:TDG Past and Future Earnings, August 5th 2019

This results in an annual growth rate of 24% based on the most recent earnings level of US$905m to the final forecast of US$1.5b by 2022. This leads to an EPS of $24.69 in the final year of projections relative to the current EPS of $16.28. Margins are currently sitting at 24%, approximately the same as previous years. With analysts forecasting revenue growth of 0.70595 and TDG's net income growth expected to roughly track that, this company may add value for shareholders over time.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For TransDigm Group, there are three pertinent aspects you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is TransDigm Group worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether TransDigm Group is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of TransDigm Group? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.