Transdigm Group Incorporated ( TDG Quick Quote TDG - Free Report) is expected to report its second-quarter fiscal 2021 results soon.
In the last reported quarter, the company delivered a negative earnings surprise of 5.74%. However, it surpassed the Zacks Consensus Estimate in three out of the trailing four quarters, delivering an earnings surprise of 33.77%, on average.
Let’s see how things have shaped up prior to this announcement.
Factors to Consider
Since the fourth quarter of 2020, TransDigm Group has been seeing some upside in its commercial aftermarket revenues, which is typically the largest and most profitable portion of business. However, the pace of recovery in global air traffic over the past couple of quarters have been quite slow and definitely not anywhere near the pre-pandemic level. Therefore, lower commercial aftermarket revenues are expected to have hurt the company’s overall top-line performance in the first quarter of 2021.
On the other hand, as the pandemic is still ongoing, its impact on commercial aerospace is projected to have hurt TransDigm Group’s commercial Original Equipment Manufacturer (OEM) sales once again in the first quarter. On a brighter note, the company’s defense business is expected to have been strong, continuing the solid order growth that it has witnessed in the past quarters. This might have contributed favorably to its quarterly revenues.
Notably, the Zacks Consensus Estimate for fiscal second-quarter revenues is pegged at $1.18 billion, indicating a deterioration of 18.1% from second-quarter fiscal 2020.
Such dismal sales projections make us skeptical about the company’s fiscal second-quarter earnings. Moreover, the impact of low commercial aftermarket revenues has been hurting TransDigm Group’s operating margin, a trend we expect to have prevailed in the fiscal second quarter as well, thereby pulling down its bottom line.
The Zacks Consensus Estimate for earnings stands at $2.52 per share, implying a plunge of 50.6% from the year-ago quarter’s reported figure.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for TransDigm Group this time around. The combination of a positive
Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But this is not the case here. Earnings ESP: The company’s Earnings ESP is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. Zacks Rank: TransDigm Group carries a Zacks Rank #3, currently. A Stock to Consider
Here is a defense company you may want to consider as it has the right combination of elements to post an earnings beat in its upcoming releases:
Triumph Group ( TGI Quick Quote TGI - Free Report) has an Earnings ESP of +9.80% and a Zacks Rank #3. You can see . the complete list of today’s Zacks #1 Rank stocks here Recent Defense Releases Lockheed Martin ( LMT Quick Quote LMT - Free Report) reported first-quarter 2021 earnings of $6.56 per share, which surpassed the Zacks Consensus Estimate of $6.32 by 3.8%. Textron Inc. ( TXT Quick Quote TXT - Free Report) reported first-quarter 2021 adjusted earnings of 70 cents per share, which exceeded the Zacks Consensus Estimate of 47 cents by 48.9%. 5 Stocks Set to Double
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