TransDigm Group reported fiscal second-quarter earnings that flew past estimates, and the aerospace contractor gave an even bigger lift to its full-year outlook. TDG stock gain more altitude in early Tuesday stock market action after closing at a record high.
TransDigm said revenues improved sequentially in all three major market channels. Sales to commercial original equipment manufacturers and to the defense market each rose 21%. Aftermarket sales to the commercial passenger market grew 20%. However, commercial aftermarket sales rose 8% overall, held down by declines in sales for freight aircraft and to the business jet and helicopter market.
The aerospace contractor is expected to see an uplift from Boeing-related turbulence, which will keep older aircraft operating longer.
In a presentation released with fiscal Q2, TransDigm said that total aftermarket sales accounted for just over 75% of earnings before interest, taxes, depreciation and amortization.
TransDigm Group comprises about 50 companies that produce highly engineered components and systems for nearly all military and commercial aircraft. About 90% of sales are unique, proprietary products, TransDigm says. About 35% of sales come in the commercial aftermarket.
TransDigm was featured as IBD Stock of the Day on April 23 as GE Aerospace flew past Q1 expectations, also helped by aftermarket demand amid Boeing production woes.
TransDigm Earnings
Estimates: Analysts expected fiscal Q2 earnings per share of $7.42, up 24% from a year ago, according to the FactSet consensus. Revenue was seen rising 18% to $1.878 billion.
Results: Adjusted EPS surged 34% to $7.99. Revenue grew 21% to $1.919 billion.
Outlook: TransDigm raised its revenue range outlook by $75 million at the midpoint to a range of $7.68 billion to $7.8 billion. The outlook for adjusted EPS got a $1.57 bump at the midpoint to a range of $31.75 to $33.09. The FactSet consensus ahead of earnings was for EPS to rise 23% to $31.73.
TDG Stock Action
TransDigm added 0.6% to 1,310 in light volume early Tuesday, after climbing 0.6% to 1,301.63 in Monday stock market action. On April 23, TDG stock flashed an early entry opportunity as it advanced from its 50-day line and cleared its 21-day exponential average.
TransDigm's move off the 50-day line subsequently cleared a 1246.22 buy point from a four-weeks-tight pattern, which features consecutive weekly moves of no more than 1.5%.
Despite its ongoing ascent, TDG stock isn't exactly setting the pace for the Aerospace/Defense industry group. IBD Stock Checkup ranks TransDigm No. 17 in the industry group based on an array of technical and fundamental factors. AeroVironment, a military drone contractor, leads the group. Howmet and FTAI Aviation are among other standouts.
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