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TransDigm's Q4 adjusted EPS rose 15% to $12.44, beating estimates by 2.4%, as sales climbed 23%.
EBITDA increased 19.9%, but gross and EBITDA margins contracted amid higher expenses and acquisition dilution.
TDG completed a $1.07B acquisition, returned $943 million to shareholders and issued fiscal 2027 guidance.
TransDigm Group Incorporated (TDG - Free Report) reported fourth-quarter fiscal 2026 adjusted earnings of $12.44 per share, which topped the Zacks Consensus Estimate of $12.15 by 2.4%. The bottom line also improved 15% from the prior-year quarter’s figure of $10.82.
TransDigm’s Q4 Sales Discussion
Sales rose 23% year over year to $2.99 billion and beat the consensus estimate of $2.94 billion by 1.7%. Organic sales growth was 14%, reflecting strong underlying business performance. The company also reported higher EBITDA As Defined, supported by increased sales and its operating strategy.
Transdigm Group Incorporated Price, Consensus and EPS Surprise
Gross profit increased 19.9% year over year to $1.76 billion. However, gross margin contracted to 59.0% from 60.3% in the year-ago quarter. Selling and administrative expenses rose to $332 million from $256 million, representing 11.1% of sales compared with 10.5% a year earlier.
Operating income increased 17.5% to $1.36 billion from $1.16 billion. Net interest expense climbed 27.6% to $536 million, reflecting the company's higher year-over-year gross debt balance. Income tax expenses also increased to $192 million from $143 million.
EBITDA As Defined rose 19.9% to $1.58 billion from $1.32 billion. However, the corresponding margin contracted to 53.0% from 54.2%, including approximately two percentage points of dilution from recent acquisitions.
GAAP net income declined 3.8% to $586 million from $609 million, primarily due to increased interest and tax expenses. Nevertheless, reported earnings improved to $10.33 per share from $7.75 in the prior-year quarter.
TransDigm's Acquisition and Capital Moves Stay Active
TransDigm completed the acquisition of Prince & Izant on Sept. 28, 2026, for approximately $1.07 billion in cash, including certain tax benefits. The acquired business manufactures highly engineered brazing alloys and specialty metal components serving aerospace and defense, aeroderivative turbine and transportation markets.
During the quarter, TDG also issued $3 billion of 6.75% senior secured notes maturing in January 2035. The company used the proceeds to repurchase approximately $1.8 billion of its outstanding senior secured notes due in 2028 and for general corporate purposes.
TransDigm returned $943 million to shareholders through the repurchase of approximately 820,000 shares at an average price of $1,150 per share.
TGD’s Financial Position
Cash and cash equivalents totaled $2.28 billion as of Sept. 30, 2026, down from $2.81 billion at the end of fiscal 2025. Long-term debt increased to $33.74 billion from $29.17 billion, while short-term borrowings under the trade receivable securitization facility reached $873 million.
Net cash provided by operating activities for fiscal 2026 increased 7.3% to $2.19 billion from $2.04 billion in fiscal 2025.
TDG Issues Fiscal 2027 Outlook
TransDigm expects fiscal 2027 net sales between $11.95 billion and $12.15 billion, indicating approximately 14% growth at the midpoint. The Zacks Consensus Estimate is pegged at $11.61 billion, which is lower than the company’s guided range.
Adjusted earnings are forecasted to between $47.09 and $47.94 per share, representing approximately 15% growth at the midpoint. The Zacks Consensus Estimate for fiscal 2027 earnings is pegged at $48.38 per share, higher than the company’s guidance.
Management anticipates commercial OEM revenue growth in the high single-digit to low double-digit percentage range. Commercial aftermarket and defense revenues are each expected to grow at a high single-digit rate, supporting the company's expectations for continued expansion across its primary aerospace markets.
Teledyne Technologies Inc. (TDY - Free Report) reported third-quarter 2026 adjusted earnings of $6.72 per share, which surpassed the Zacks Consensus Estimate of $6.15 by 9.3%. The bottom line also improved 20.6% from $5.57 recorded in the year-ago quarter.
TDY’s total sales were $1.68 billion, which beat the Zacks Consensus Estimate of $1.66 billion by 1.5%. The top line also jumped 9.4% from $1.54 billion reported in the year-ago quarter.
Hexcel Corporation (HXL - Free Report) reported third-quarter 2026 adjusted earnings of 50 cents per share, which improved 35.1% from the year-ago quarter’s figure of 37 cents. The bottom line also surpassed the Zacks Consensus Estimate of 48 cents by 4.2%.
The company’s net sales were $496.4 million, which missed the Zacks Consensus Estimate of $500 million by 0.8%. The top line, however, witnessed an improvement of 8.8% from the year-ago quarter’s figure of $456.2 million.
Textron Inc. (TXT - Free Report) reported third-quarter 2026 adjusted earnings of $1.76 per share, which surpassed the Zacks Consensus Estimate of $1.43 by 23.1%. The bottom line also rose 13.5% from $1.55 in the year-ago quarter.
The company reported total revenues of $3.75 billion, which missed the Zacks Consensus Estimate of $3.76 billion by 0.2%. However, the top line increased 4.1% from the year-ago quarter’s level of $3.6 billion.
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TransDigm's Q4 Earnings Surpass Estimates, Sales Increase Y/Y
Key Takeaways
TransDigm Group Incorporated (TDG - Free Report) reported fourth-quarter fiscal 2026 adjusted earnings of $12.44 per share, which topped the Zacks Consensus Estimate of $12.15 by 2.4%. The bottom line also improved 15% from the prior-year quarter’s figure of $10.82.
TransDigm’s Q4 Sales Discussion
Sales rose 23% year over year to $2.99 billion and beat the consensus estimate of $2.94 billion by 1.7%. Organic sales growth was 14%, reflecting strong underlying business performance. The company also reported higher EBITDA As Defined, supported by increased sales and its operating strategy.
Transdigm Group Incorporated Price, Consensus and EPS Surprise
Transdigm Group Incorporated price-consensus-eps-surprise-chart | Transdigm Group Incorporated Quote
TDG's Profitability Faces Margin Pressure
Gross profit increased 19.9% year over year to $1.76 billion. However, gross margin contracted to 59.0% from 60.3% in the year-ago quarter. Selling and administrative expenses rose to $332 million from $256 million, representing 11.1% of sales compared with 10.5% a year earlier.
Operating income increased 17.5% to $1.36 billion from $1.16 billion. Net interest expense climbed 27.6% to $536 million, reflecting the company's higher year-over-year gross debt balance. Income tax expenses also increased to $192 million from $143 million.
EBITDA As Defined rose 19.9% to $1.58 billion from $1.32 billion. However, the corresponding margin contracted to 53.0% from 54.2%, including approximately two percentage points of dilution from recent acquisitions.
GAAP net income declined 3.8% to $586 million from $609 million, primarily due to increased interest and tax expenses. Nevertheless, reported earnings improved to $10.33 per share from $7.75 in the prior-year quarter.
TransDigm's Acquisition and Capital Moves Stay Active
TransDigm completed the acquisition of Prince & Izant on Sept. 28, 2026, for approximately $1.07 billion in cash, including certain tax benefits. The acquired business manufactures highly engineered brazing alloys and specialty metal components serving aerospace and defense, aeroderivative turbine and transportation markets.
During the quarter, TDG also issued $3 billion of 6.75% senior secured notes maturing in January 2035. The company used the proceeds to repurchase approximately $1.8 billion of its outstanding senior secured notes due in 2028 and for general corporate purposes.
TransDigm returned $943 million to shareholders through the repurchase of approximately 820,000 shares at an average price of $1,150 per share.
TGD’s Financial Position
Cash and cash equivalents totaled $2.28 billion as of Sept. 30, 2026, down from $2.81 billion at the end of fiscal 2025. Long-term debt increased to $33.74 billion from $29.17 billion, while short-term borrowings under the trade receivable securitization facility reached $873 million.
Net cash provided by operating activities for fiscal 2026 increased 7.3% to $2.19 billion from $2.04 billion in fiscal 2025.
TDG Issues Fiscal 2027 Outlook
TransDigm expects fiscal 2027 net sales between $11.95 billion and $12.15 billion, indicating approximately 14% growth at the midpoint. The Zacks Consensus Estimate is pegged at $11.61 billion, which is lower than the company’s guided range.
Adjusted earnings are forecasted to between $47.09 and $47.94 per share, representing approximately 15% growth at the midpoint. The Zacks Consensus Estimate for fiscal 2027 earnings is pegged at $48.38 per share, higher than the company’s
guidance.
Management anticipates commercial OEM revenue growth in the high single-digit to low double-digit percentage range. Commercial aftermarket and defense revenues are each expected to grow at a high single-digit rate, supporting the company's expectations for continued expansion across its primary aerospace markets.
TDG’s Zacks Rank
TransDigm currently has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Recent Defense Releases
Teledyne Technologies Inc. (TDY - Free Report) reported third-quarter 2026 adjusted earnings of $6.72 per share, which surpassed the Zacks Consensus Estimate of $6.15 by 9.3%. The bottom line also improved 20.6% from $5.57 recorded in the year-ago quarter.
TDY’s total sales were $1.68 billion, which beat the Zacks Consensus Estimate of $1.66 billion by 1.5%. The top line also jumped 9.4% from $1.54 billion reported in the year-ago quarter.
Hexcel Corporation (HXL - Free Report) reported third-quarter 2026 adjusted earnings of 50 cents per share, which improved 35.1% from the year-ago quarter’s figure of 37 cents. The bottom line also surpassed the Zacks Consensus Estimate of 48 cents by 4.2%.
The company’s net sales were $496.4 million, which missed the Zacks Consensus Estimate of $500 million by 0.8%. The top line, however, witnessed an improvement of 8.8% from the year-ago quarter’s figure of $456.2 million.
Textron Inc. (TXT - Free Report) reported third-quarter 2026 adjusted earnings of $1.76 per share, which surpassed the Zacks Consensus Estimate of $1.43 by 23.1%. The bottom line also rose 13.5% from $1.55 in the year-ago quarter.
The company reported total revenues of $3.75 billion, which missed the Zacks Consensus Estimate of $3.76 billion by 0.2%. However, the top line increased 4.1% from the year-ago quarter’s level of $3.6 billion.