Trade-Ideas: TransDigm Group (TDG) Is Today's Post-Market Leader Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified TransDigm Group ( TDG) as a post-market leader candidate. In addition to specific proprietary factors, Trade-Ideas identified TransDigm Group as such a stock due to the following factors:

  • TDG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $84.5 million.
  • TDG is up 2.8% today from today's close.

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More details on TDG:

TransDigm Group Incorporated, through its subsidiaries, designs, produces, and supplies engineered aerospace components for commercial and military aircraft customers in the United States. TDG has a PE ratio of 32.1. Currently there are 7 analysts that rate TransDigm Group a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for TransDigm Group has been 410,800 shares per day over the past 30 days. TransDigm Group has a market cap of $7.2 billion and is part of the industrial goods sector and aerospace/defense industry. The stock has a beta of 0.84 and a short float of 2.8% with 2.32 days to cover. Shares are up 0.1% year to date as of the close of trading on Wednesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates TransDigm Group as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.6%. Since the same quarter one year prior, revenues slightly increased by 5.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • TRANSDIGM GROUP INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TRANSDIGM GROUP INC increased its bottom line by earning $5.97 versus $2.80 in the prior year. This year, the market expects an improvement in earnings ($6.85 versus $5.97).
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to other companies in the Aerospace & Defense industry and the overall market on the basis of return on equity, TRANSDIGM GROUP INC has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
  • The gross profit margin for TRANSDIGM GROUP INC is rather high; currently it is at 56.79%. Regardless of TDG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TDG's net profit margin of 15.68% compares favorably to the industry average.
  • The debt-to-equity ratio is very high at 5.41 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Regardless of the company's weak debt-to-equity ratio, TDG has managed to keep a strong quick ratio of 2.16, which demonstrates the ability to cover short-term cash needs.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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