TransDigm Group Incorporated (TDG)
Valuation Overview•Is TransDigm Group Incorporated Overvalued or Undervalued?
Trading at a relative discount to industry peers, suggesting a specific risk premium is applied.
Moderate quality score of 70/100, reflecting stable operating margins and manageable leverage.
Analysts remain bullish, forecasting further upside expansion with consensus targets suggesting solid gains.
Verdict: Solid fundamental quality, though solvency presents a headwind.
Wall Street is highly bullish, projecting significant upside alongside robust expected earnings growth. This outlook is strongly supported by highly attractive capital returns, anchored by a strong dividend yield, though free cash flow coverage appears tight.
TDG demonstrates strong business quality with robust profitability and healthy margins (highlighted by a massive 20.9% ROIC). However, the balance sheet carries elevated leverage, requiring careful monitoring of debt servicing capabilities.
The company is driving exceptional top-line expansion (17.6% 3Y CAGR) paired with highly explosive earnings growth (33.8% EPS 3Y CAGR). This growth is supported by elite operational efficiency, sustaining an impressive 46.5% operating margin.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $2.3B | +11.2% | +17.6% | +11.6% | +12.6% | |
| EBITDA | $1.1B | — | +22.5% | — | — | |
| Net Income | $386.0M | +21.0% | +33.8% | — | +16.7% | |
| EPS (Diluted) | $6.62 | +25.2% | +33.8% | +31.1% | +15.1% | |
| Free Cash Flow | $772.0M | -3.4% | +29.9% | +10.4% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 59.0% | 59.1% | 57.4% | 55.2% |
| Operating Margin | 46.5% | 45.3% | 42.4% | 41.2% |
| Net Margin | 21.6% | 21.6% | 19.0% | 17.8% |
| FCF Margin | 20.6% | 21.0% | 19.0% | 19.9% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $9.46 | $9.85 | +4.1% | ||
| Q1'26 | $8.10 | $8.23 | +1.6% | ||
| Q4'25 | $10.04 | $10.82 | +7.8% | ||
| Q3'25 | $9.89 | $9.60 | -2.9% | ||
| Q2'25 | $8.96 | $9.11 | +1.7% | ||
| Q1'25 | $7.83 | $7.83 | +0.0% | ||
| Q4'24 | $9.26 | $9.83 | +6.2% | ||
| Q3'24 | $8.56 | $9.00 | +5.1% |
Total return is +0.3% (1Y), lagging the benchmark by -24.7%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | -2.2% | -11.5% | — |
| 1Y | +0.3% | -24.7% | +6.4% |
| 3YCAGR | +23.0% | +3.1% | +24.3% |
| 5YCAGR | +18.8% | +5.7% | +33.4% |
| 10YCAGR | +20.3% | +6.6% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about TransDigm Group Incorporated (TDG) valuation, health, and returns.
TransDigm Group Incorporated is estimated to be fair under our discounted cash flow framework. relative multiples indicate the stock is Cheap versus peers compared to industry peers. trading near fair value (DCF: $1323.94)
TransDigm Group Incorporated has multiple valuation anchors: DCF Intrinsic Value: $1323.94 | Peer Relative Fair Value: $2342.03 | Wall Street Analyst Target: $1569.30 (implying +18.1% upside). A convergence of these signals offers higher conviction.
TransDigm Group Incorporated displays good financial health with a composite quality score of 70/100, supported by a Altman Z-Score of 0.4 (distress zone), Piotroski F-Score of 6/9, Return on Invested Capital (ROIC) of 20.9%.
TransDigm Group Incorporated pays a 12.5% dividend yield, covered by a 464% payout ratio with 0 years of growth, supplemented by a 0.7% buyback yield.
TransDigm Group Incorporated's current growth trajectory is Decelerating. The company achieved +11.2% 1Y revenue growth and +25.2% 1Y EPS growth, compared to its 3Y revenue CAGR of +17.6%.
Wall Street consensus is Buy based on 39 analysts, beating EPS expectations in 83% of recent quarters with a 3-quarter streak. The consensus price target represents a +18.1% change from current levels.
Investment risks for TransDigm Group Incorporated include: -30.1% 1-year max drawdown, elevated distress risk, stretched payout ratio. Volatility risk is characterized by a beta of 0.81x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.