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TransDigm (TDG) Soars 4.6%: Is Further Upside Left in the Stock?

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TransDigm Group (TDG - Free Report) shares soared 4.6% in the last trading session to close at $649.50. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 2.6% gain over the past four weeks.

The recent uptick in TransDigm’s share price can be attributed to the investors’ optimism that has been influencing the broader market lately, with the White House set to unveil its budget proposal on May 28. In fact, TransDigm touched a new 52-week high of $650.42 on May 27, probably on anticipations for increased federal spending on defense to be announced by President Biden in his first full budget release.

Price and Consensus

Price Consensus Chart for TDG

This aircraft components maker is expected to post quarterly earnings of $2.92 per share in its upcoming report, which represents a year-over-year change of +89.6%. Revenues are expected to be $1.21 billion, up 18% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For TransDigm, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on TDG going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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