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Transdigm Group Incorporated (TDG) Soars to 52-Week High, Time to Cash Out?
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Have you been paying attention to shares of TransDigm Group (TDG - Free Report) ? Shares have been on the move with the stock up 6.9% over the past month. The stock hit a new 52-week high of $771.34 in the previous session. TransDigm Group has gained 22.3% since the start of the year compared to the 1.9% move for the Zacks Aerospace sector and the 7.2% return for the Zacks Aerospace - Defense Equipment industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on February 7, 2023, TransDigm reported EPS of $4.58 versus consensus estimate of $4.31.
For the current fiscal year, TransDigm is expected to post earnings of $22.26 per share on $6.14 billion in revenues. This represents a 29.87% change in EPS on a 13.18% change in revenues. For the next fiscal year, the company is expected to earn $26 per share on $6.67 billion in revenues. This represents a year-over-year change of 16.83% and 8.56%, respectively.
Valuation Metrics
TransDigm may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
TransDigm has a Value Score of D. The stock's Growth and Momentum Scores are B and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 34.6X current fiscal year EPS estimates, which is a premium to the peer industry average of 23X. On a trailing cash flow basis, the stock currently trades at 37.9X versus its peer group's average of 15.9X. Additionally, the stock has a PEG ratio of 1.91. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, TransDigm currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if TransDigm meets the list of requirements. Thus, it seems as though TransDigm shares could have potential in the weeks and months to come.
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Transdigm Group Incorporated (TDG) Soars to 52-Week High, Time to Cash Out?
Have you been paying attention to shares of TransDigm Group (TDG - Free Report) ? Shares have been on the move with the stock up 6.9% over the past month. The stock hit a new 52-week high of $771.34 in the previous session. TransDigm Group has gained 22.3% since the start of the year compared to the 1.9% move for the Zacks Aerospace sector and the 7.2% return for the Zacks Aerospace - Defense Equipment industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on February 7, 2023, TransDigm reported EPS of $4.58 versus consensus estimate of $4.31.
For the current fiscal year, TransDigm is expected to post earnings of $22.26 per share on $6.14 billion in revenues. This represents a 29.87% change in EPS on a 13.18% change in revenues. For the next fiscal year, the company is expected to earn $26 per share on $6.67 billion in revenues. This represents a year-over-year change of 16.83% and 8.56%, respectively.
Valuation Metrics
TransDigm may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
TransDigm has a Value Score of D. The stock's Growth and Momentum Scores are B and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 34.6X current fiscal year EPS estimates, which is a premium to the peer industry average of 23X. On a trailing cash flow basis, the stock currently trades at 37.9X versus its peer group's average of 15.9X. Additionally, the stock has a PEG ratio of 1.91. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, TransDigm currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if TransDigm meets the list of requirements. Thus, it seems as though TransDigm shares could have potential in the weeks and months to come.