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With a market cap of $73.5 billion, TransDigm Group Incorporated (TDG) is a leading U.S. aerospace manufacturer headquartered in Cleveland, Ohio. It designs and supplies proprietary, highly engineered aircraft components across commercial and military markets, organized into Power & Control, Airframe, and Non-Aviation segments.
Companies worth more than $10 billion are generally labeled as “large-cap” stocks and TransDigm Group fits this criterion perfectly. With strong aftermarket exposure, pricing power, and an acquisition-driven growth strategy, TransDigm generates high margins and resilient cash flows, though it has faced scrutiny over its pricing practices.
However, TDG shares have retreated 21.3% from their 52-week high of $1,623.82. TransDigm Group’s shares have risen 12.2% over the past three months, outperforming the broader Nasdaq Composite’s ($NASX) 10.8% rise over the same time frame.
TDG stock is up marginally on a YTD basis, trailing the $NASX’s 11.3% rise. Moreover, shares of the aircraft components maker have decreased 4.1% over the past 52 weeks, underperforming $NASX’s 25.5% over the same time frame.
The stock has been trading above its 200-day moving average since late April, but has dipped below its 50-day moving average since early August.
On Aug. 5, TransDigm Group released its Q3 results and its shares slumped 11.9% in the next trading session. Despite delivering healthy year-over-year growth, results came in below expectations. Quarterly net sales rose 9.3% to $2.2 billion but fell short of estimates by 2.6%. Margin pressures weighed on profitability, with adjusted EPS increasing 6.7% to $9.60, missing the consensus by a wider gap.
TDG has significantly lagged behind its rival, GE Aerospace (GE). GE stock has soared 68% over the past 52 weeks and 65.4% on a YTD basis.
Despite the stock’s weak performance over the past year, analysts remain highly bullish on TDG. The stock has a consensus rating of “Strong Buy” from the 23 analysts covering the stock. Its mean price target of $1,619.82 implies an upswing potential of 26.7% from the current market prices.
