Here's Why You Must Add TransDigm Group Stock to Your Portfolio Now

TransDigm Group Inc. TDG is a producer, supplier and designer of highly engineered aerospace components, systems and subsystems for use in commercial and military aircraft. Its rising earnings estimates, improving budget for defense, better solvency and strong liquidity offer a great investment opportunity in the Zacks Aerospace Defense Equipment industry.

Let’s focus on the reasons that make this Zacks Rank #2 (Buy) stock an investment opportunity at the moment.

TDG’s Growth Projections & Surprise History

The Zacks Consensus Estimate for TDG’s fiscal 2025 sales is pegged at $8.87 billion, which indicates year-over-year growth of 11.7%.

The consensus estimate for the company’s earnings per share (EPS) for fiscal 2025 is pegged at $37.21, which indicates year-over-year growth of 9.5%.

TransDigm Group’s long-term (three to five years) earnings growth is pegged at 13.5%.

It delivered an average earnings surprise of 6.50% in the last four quarters.

TDG’s Solvency

TransDigm Group’s times interest earned ratio (TIE) at the end of the first quarter of fiscal 2025 was 2.7. The strong TIE ratio indicates that the company will be able to meet its interest payment obligations in the near term without any problems.

TDG’s Liquidity

The company’s current ratio at the end of the first quarter of fiscal 2025 was 2.70, higher than the industry’s average of 1.68. The ratio, being greater than one, indicates TransDigm Group’s ability to meet its future short-term liabilities without difficulties.

Rising Defense Budget

In August 2024, the U.S. Senate Committee on Appropriations approved the Fiscal Year 2025 Defense Appropriations Act, which provides $852.2 billion in total funding, indicating a 3.3% increase from fiscal 2024’s approved amount. Such a robust budgetary provision offers solid growth opportunities for TransDigm Group, with its products holding a significant position in the U.S. defense market.

Improving Aftermarket Sales

The commercial aerospace industry is booming due to the steadily improving air traffic trend over the past year. This, in turn, has been benefiting TransDigm Group. In the first quarter of fiscal 2025, the company continued to witness robust commercial air traffic demand, with both domestic and international revenue passenger kilometers reflecting strong growth trends. Consequently, TDG’s commercial aftermarket sales witnessed a solid 9.9% year-over-year improvement in the fiscal first quarter.

TDG Stock Price Performance

In the past three months, TDG shares have rallied 3% against the industry’s decline of 3.3%.

Other Stocks to Consider

A few other top-ranked stocks from the same industry are Heico HEI, Astronics ATRO and Triumph Group TGI. Astronics and Triumph Group each sport a Zacks Rank #1 (Strong Buy) at present, while Heico carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

HEI’s long-term earnings growth rate is pegged at 17%. The Zacks Consensus Estimate for the company’s total revenues for fiscal 2025 is $4.29 billion, which indicates year-over-year growth of 11.3%.

The Zacks Consensus Estimate for ATRO’s 2025 EPS is $1.29, which indicates year-over-year growth of 18.4%. The consensus estimate for ATRO’s total revenues for 2025 is pegged at $829.5 million, which indicates year-over-year growth of 4.3%.

TGI delivered an average earnings surprise of 159.38% in the last four quarters. The Zacks Consensus Estimate for TGI’s fiscal 2025 EPS is 68 cents, which is better than the six cents loss per share in the prior year.

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This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research