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What's in the Cards for TransDigm (TDG) in Q1 Earnings?
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TransDigm Group Incorporated (TDG - Free Report) is scheduled to report second-quarter fiscal 2018 results on May 1, before the opening bell. In the quarter to be reported, the company is expected to post solid growth in the Life Sciences & Diagnostics business.
The company has an excellent earnings surprise history, beating estimates thrice over the trailing four quarters, the average positive surprise being 0.9%. In the last reported quarter, the company posted earnings of $2.76 per share, missing estimates by 5.1% year over year.
Let’s see how things are shaping up for this announcement.
Factors to Consider
TransDigm has been riding on robust momentum, driven by complementary acquisitions, positive industry trends, solid operational execution and steadily growing end markets. The company projects operating profit and bottom-line growth to benefit from the same in the to-be-reported quarter.
TransDigm designs, produces and supplies highly-engineered proprietary aerospace components and certain systems with a significant aftermarket presence. For instance, about 90% of the company’s sales are generated by proprietary engineered products, that is, products for which the company owns the intellectual property. We believe that this will enhance the revenue generation capacity through all phases of the aerospace cycle, consequently supplementing its financials.
TransDigm’s thriving after-market business continues to expand as a majority of aircrafts bought during the financial crisis is beginning to age and require more frequent and comprehensive servicing. We believe that stable after-markets, which have historically produced higher gross margins, will continue to drive financial performance in the upcoming quarters.
Transdigm Group Incorporated Price, Consensus and EPS Surprise
Of late, the company’s Defense business has also been performing better than expectations, adding to its strength. Moreover, a diversified revenue base lowers the company’s dependence on any particular product, platform or market channel and will continue to play a significant role in maintaining financial performance in the near future.
However, TransDigm has been witnessing negative trends in some end markets, of late, like weaker defense after-market orders as well as soft business jet, helicopter and freighter revenues. This is likely to strain its top-line growth in the fiscal first-quarter results.
Earnings Whispers
Our proven model does not show that TransDigm is likely to beat estimates in this quarter. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. This is not the case here as you will see below:
Zacks ESP: TransDigm has an Earnings ESP of -1.34%, as the Most Accurate estimate of $3.61 is pegged lower than the Zacks Consensus Estimate of $3.66. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company carries a Zacks Rank #3, which increases the predictive power of the ESP. However, the company’s negative ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Century Aluminum Company (CENX - Free Report) , with Earnings ESP of +29.41% and a Zacks Rank of 1, is slated to report results on May 3.
Cardtronics PLC has an Earnings ESP of +10.00% and a Zacks Rank of 2. The company is likely to release earnings on May 3.
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What's in the Cards for TransDigm (TDG) in Q1 Earnings?
TransDigm Group Incorporated (TDG - Free Report) is scheduled to report second-quarter fiscal 2018 results on May 1, before the opening bell. In the quarter to be reported, the company is expected to post solid growth in the Life Sciences & Diagnostics business.
The company has an excellent earnings surprise history, beating estimates thrice over the trailing four quarters, the average positive surprise being 0.9%. In the last reported quarter, the company posted earnings of $2.76 per share, missing estimates by 5.1% year over year.
Let’s see how things are shaping up for this announcement.
Factors to Consider
TransDigm has been riding on robust momentum, driven by complementary acquisitions, positive industry trends, solid operational execution and steadily growing end markets. The company projects operating profit and bottom-line growth to benefit from the same in the to-be-reported quarter.
TransDigm designs, produces and supplies highly-engineered proprietary aerospace components and certain systems with a significant aftermarket presence. For instance, about 90% of the company’s sales are generated by proprietary engineered products, that is, products for which the company owns the intellectual property. We believe that this will enhance the revenue generation capacity through all phases of the aerospace cycle, consequently supplementing its financials.
TransDigm’s thriving after-market business continues to expand as a majority of aircrafts bought during the financial crisis is beginning to age and require more frequent and comprehensive servicing. We believe that stable after-markets, which have historically produced higher gross margins, will continue to drive financial performance in the upcoming quarters.
Transdigm Group Incorporated Price, Consensus and EPS Surprise
Transdigm Group Incorporated Price, Consensus and EPS Surprise | Transdigm Group Incorporated Quote
Of late, the company’s Defense business has also been performing better than expectations, adding to its strength. Moreover, a diversified revenue base lowers the company’s dependence on any particular product, platform or market channel and will continue to play a significant role in maintaining financial performance in the near future.
However, TransDigm has been witnessing negative trends in some end markets, of late, like weaker defense after-market orders as well as soft business jet, helicopter and freighter revenues. This is likely to strain its top-line growth in the fiscal first-quarter results.
Earnings Whispers
Our proven model does not show that TransDigm is likely to beat estimates in this quarter. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. This is not the case here as you will see below:
Zacks ESP: TransDigm has an Earnings ESP of -1.34%, as the Most Accurate estimate of $3.61 is pegged lower than the Zacks Consensus Estimate of $3.66. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company carries a Zacks Rank #3, which increases the predictive power of the ESP. However, the company’s negative ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
EOG Resources, Inc. (EOG - Free Report) has an Earnings ESP of +4.07% and a Zacks Rank of 1. The company is expected to release quarterly numbers around May 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Century Aluminum Company (CENX - Free Report) , with Earnings ESP of +29.41% and a Zacks Rank of 1, is slated to report results on May 3.
Cardtronics PLC has an Earnings ESP of +10.00% and a Zacks Rank of 2. The company is likely to release earnings on May 3.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>