Start here if you're new
what it is
TransDigm makes niche aircraft parts that airlines and militaries keep buying because planes cannot fly without them.
how it gets paid
Last year Transdigm made $7.9B in revenue. actuators and controls was the main engine at $2.2B, or 28% of sales.
what just happened
The last reported quarter delivered $10.82 EPS versus an $8.52 estimate, a 27.0% surprise.
At a glance
B+ balance sheet — decent shape, but not bulletproof
50/100 earnings predictability — expect surprises
34.5x trailing p/e — you're paying up for this one
20.0% return on capital — nothing to write home about
xvary composite: 58/100 — below average
What they do
TransDigm makes niche aircraft parts that airlines and militaries keep buying because planes cannot fly without them.
Almost all of the business is aerospace. Non-aerospace was less than 5% of fiscal 2025 sales, so you are buying a plane-parts toll booth, not a conglomerate side quest. Proprietary components (unique parts designed into an aircraft → hard to swap out later → pricing power) help produce a 52.5% operating margin and a 30.6% net profit margin.
How they make money
$7.9B
annual revenue
actuators and controls
$2.2B
+9.0%
ignition and engine technology
$1.9B
+9.0%
pumps and valves
$1.7B
+9.0%
other proprietary aerospace components
$1.7B
+9.0%
non-aerospace
$0.4B
flat
The products that matter
replacement parts for existing fleets
commercial aftermarket
$1.3B · 57% of revenue
this is the core engine: $1.3B in the latest quarter and up 13.9% from last year. it is where the pricing power tends to show up.
margin driver
defense and military components
military/defense
$0.7B · 31% of revenue
$0.7B of quarterly sales growing 11% gives TDG a second leg beyond commercial flying. that matters when airline demand gets noisy.
stability
parts sold into new aircraft builds
oem production
$0.3B · 12% of revenue
only $0.3B today, but every oem placement can feed aftermarket demand later. small now, strategically useful later.
future installed base
Key numbers
52.5%
operating margin
Operating margin → profit after running the business → what is left before interest and taxes. At 52.5%, this company prints money on each sale.
$45.95
FY2027 EPS
EPS → profit for each share you own → what valuation hangs on. The FY2027 estimate is $45.95, so the market is already pricing in continued execution.
$29.2B
long-term debt
Long-term debt → money owed over many years → fixed obligations you cannot charm away. The business is strong, but the balance sheet is carrying weight.
20.0%
return on capital
Return on capital → profit from the money invested in the business → tells you if management turns dollars into more dollars. At 20.0%, it does.
Financial health
B+
strength
- balance sheet grade B+ — solid but not elite
- risk rank 3 — safer than 50% of stocks
- price stability 75 / 100
- long-term debt $29.2B (29% of capital)
- net profit margin 30.6% — keeps 31 cents of every dollar in revenue
B+ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in TDG 3 years ago → it's now worth $20,320.
The index would have given you $13,880.
source: institutional data · total return
What just happened
beat estimates
The last reported quarter delivered $10.82 EPS versus an $8.52 estimate, a 27.0% surprise.
Quarterly EPS still beat hard, but the next read was messier. The latest quarter listed in the source showed EPS of $6.62, down 13% vs. prior year, while management commentary pointed to margin pressure from the $100 million Servotronics acquisition.
$10.82
eps
27.0%
surprise
17.0%
gross margin
the number that mattered
The 27.0% EPS surprise matters most because it shows this company can still outrun expectations even with acquisition-related pressure in the background.
-
transdigm’s share price fell markedly after releasing mixed fiscal 2026 first-quarter results. (year ends september 30th.) the top-line performance was sound, with revenues of $2.29 billion increasing 13.9% vs. prior year.
-
excluding the impact of acquisitions, we estimate a still solid top-line growth rate of 9.5% for the december period.
-
quarterly earnings on the other hand grew by just 5.1%, as margins were pressured some by the $100 million servotronics acquisition completed in july and the $765 million simmonds precision products purchase that closed in october.another spree of recent acquisition agreements, plus the company’s updated outlook for fiscal 2026, suggest a continuation of narrower profit margins over the intermediate term.
-
transdigm’s track record on executing its growth-via-acquisition strategy gives us confidence that its recent brisk m&a activity will pay off.servotronics, though small, expanded transdigm’s manufacturing portfolio into the servo controls market. these systems are used to precisely manage the position, velocity, or torque of a motor, allowing for highly accurate movement in robotics and industrial automation. the simmonds purchase from rtx corp. strengthened the portfolio by adding specialized fuel & proximity sensing and structural health monitoring solutions for the aerospace and defense (a&d) end markets.
-
in keeping with transdigm’s blueprint for success, simmonds products are highly engineered and nearly all proprietary, making it the sole manufacturer of critical aftermarket parts on 40% of its $350 million in annual revenue.at the start of the new calendar year, transdigm announced agreements with private equity firms to acquire stellant systems for $960 million and jets parts engineering (jpe) plus victor sierra aviation (vsa) for $2.2 billion.
source: company earnings report, 2026
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What could go wrong
your biggest threat is acquisition-led margin pressure on a 34.5x stock.
high
integration risk from the acquisition pipeline
recent deals already pressured quarterly margins, and the next wave is not small: stellant systems at $960M plus jets parts engineering and victor sierra aviation at $2.2B.
if margins stay under pressure, the multiple has room to fall before earnings catch up
med
commercial aftermarket is still the main engine
57% of revenue comes from commercial aftermarket. that is the best part of the business when fleets are busy. it is still cyclical when air travel softens.
a slowdown here hits the highest-quality revenue stream first
med
$29.2B of long-term debt reduces flexibility
the balance sheet is rated B+, not A+. leverage works fine while margins stay at 30.6% and deals keep compounding. it gets less comfortable if either slips.
debt is manageable today, but it narrows the margin for error
med
expectations are high enough to punish merely good quarters
TDG trades at 34.5x trailing earnings, and the stock dropped 9% in 30 days even after a beat. the market is not grading on effort.
you do not need bad results to get a bad stock reaction
between 34.5x earnings, $29.2B of debt, and 57% exposure to commercial aftermarket, TDG has less room for error than the margins suggest.
source: institutional data · regulatory filings · risk analysis
Pay attention to
the key metric
commercial aftermarket growth versus total growth
57% of revenue sits here. if this segment slows while acquisitions do the heavy lifting, the quality of growth gets worse.
calendar
next earnings report
watch whether revenue growth still outpaces EPS growth. one quarter can be noise. two starts to look like a pattern.
risk
integration of the new deal slate
the market already knows transdigm likes to buy. what matters now is whether the $960M and $2.2B deals expand margins or dilute them.
trend
multiple compression risk
34.5x earnings leaves the stock vulnerable if growth drifts from 13.9% toward the 9.5% organic pace investors just saw.
Analyst rankings
earnings predictability
50 / 100
middle of the pack. in human-speak, analysts do not see this as a smooth quarter-to-quarter story.
balance sheet
B+
good enough to support the model, not clean enough to ignore the debt.
valuation
34.5x
premium multiple. you are paying up for pricing power, acquisition execution, and no margin surprises.
source: institutional data
Institutional activity
institutions have been net buying for 3 consecutive quarters — 502 buyers vs. 496 sellers in 3q2025. total institutional holdings: 53.5M shares. net buying for 3 quarters.
source: institutional data
Price targets
3-5 year target range
$1080
$2110
$1287
current price
$2275
target midpoint · +77% from current · 3-5yr high: $2730 (+110% · 21% ann'l return)
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