TransDigm (TDG) Up 1.5% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for TransDigm Group (TDG). Shares have added about 1.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is TransDigm due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
TransDigm Beats on Q3 Earnings, Ups '23 EPS View
TransDigm Group reported fiscal third-quarter 2023 adjusted earnings of $7.25 per share, which beat the Zacks Consensus Estimate of $6.33 by 14.5%. The bottom line improved 49.5% from the prior-year quarter’s reported figure of $4.85.
Barring one-time items, the company recorded GAAP earnings of $6.14 per share compared with $4.10 in the year-ago quarter.
Sales
Net sales amounted to $1,744 million, up 24.7% from $1,398 million registered in the prior-year period. The reported figure also beat the Zacks Consensus Estimate of $1,677 million by 4%.
Operating Results
The gross profit for the quarter was $1,029 million, up 26.1% from the year-ago quarter’s level of $816 million.
Income from continuing operations increased 47.8% year over year to $352 million. The increase was primarily due to a rise in net sales and a favorable sales mix.
Financial Position
TransDigm’s cash and cash equivalents as of Jul 1, 2023, amounted to $3,071 million, up from $3,001 million as of Sep 30, 2022.
At the end of the fiscal third quarter, TDG’s long-term debt was $19.35 billion compared with $19.37 billion as of Sep 30, 2022.
Cash from operating activities totaled $913 million compared with $675 million at the end of fiscal third-quarter 2022.
Guidance
TransDigm has updated its financial guidance for fiscal 2023. The company now expects sales in the range of $6,525-$6,585 million compared with the previous guidance of $6,410-$6,500 million. The Zacks Consensus Estimate for the company’s full-year sales is pegged at $6.49 billion, lower than the company’s guided range.
The company currently expects adjusted earnings of $24.94-$25.36 per share for fiscal 2023, up from the prior estimated range of $23.31-$24.19 per share. The Zacks Consensus Estimate for full-year earnings is pegged at $24.03 per share, lower than the company’s guided range.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 8.41% due to these changes.
VGM Scores
At this time, TransDigm has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise TransDigm has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
TransDigm is part of the Zacks Aerospace - Defense Equipment industry. Over the past month, Teledyne Technologies (TDY), a stock from the same industry, has gained 8%. The company reported its results for the quarter ended June 2023 more than a month ago.
Teledyne reported revenues of $1.42 billion in the last reported quarter, representing a year-over-year change of +5.1%. EPS of $4.67 for the same period compares with $4.43 a year ago.
For the current quarter, Teledyne is expected to post earnings of $4.74 per share, indicating a change of +4.4% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.1% over the last 30 days.
Teledyne has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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Transdigm Group Incorporated (TDG) : Free Stock Analysis Report
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