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"We rate TRANSDIGM GROUP INC (TDG) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, increase in net income, solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 0.6%. Since the same quarter one year prior, revenues rose by 19.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- TRANSDIGM GROUP INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, TRANSDIGM GROUP INC increased its bottom line by earning $3.18 versus $2.42 in the prior year. This year, the market expects an improvement in earnings ($8.45 versus $3.18).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Aerospace & Defense industry. The net income increased by 36.0% when compared to the same quarter one year prior, rising from $84.03 million to $114.26 million.
- Powered by its strong earnings growth of 1055.00% and other important driving factors, this stock has surged by 28.58% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- The gross profit margin for TRANSDIGM GROUP INC is rather high; currently it is at 55.63%. 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 17.79% compares favorably to the industry average.
- You can view the full analysis from the report here: TDG Ratings Report