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Will Esterline Buyout DriveTransdigm Group (TDG) Q3 Earnings?

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Transdigm Group Incorporated (TDG - Free Report) is set to report third-quarter fiscal 2019 results on Aug 6, before market open.

In the last reported quarter, the company delivered a positive earnings surprise of 9.07%. Moreover, it surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 6.69%.

Let’s see how things are shaping up prior to this announcement.

Factors at Play

As steady global revenue passenger mile growth and slower retirements of older aircraft are consistently providing a significant boost to the commercial aftermarket space, Transdigm Group’s commercial market revenues can be expected to reflect solid growth in the fiscal third quarter. Moreover, management believes that the 737 Max groundings and shipping delays should not have any material impact on the company’s commercial OEM revenues.

Together, these factors indicate a solid growth potential for Transdigm Group’s commercial market revenues that constitute almost 70% of its total revenues.

These apart, the company’s Esterline Technologies acquisition worth $4 billion this March is expected to boost revenue and earnings growth in the quarter to be reported. Considering management’s prior announcement, the integration of this buyout can be expected to be over by the end of the fiscal third quarter.

The Zacks Consensus Estimate for third-quarter revenues is pegged at $1.58 billion, indicating an improvement of 61.2% from third-quarter fiscal 2018. For quarterly earnings, the consensus mark stands at $4.31, suggesting 7.5% growth from the year-ago quarter’s reported figure.

What the Zacks Model Says

Our proven model does not show that Transdigm Group is likely to beat estimates in the fiscal third quarter. That is because it does not constitute the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Transdigm Group has an Earnings ESP of 0.00%.

Zacks Rank: The company currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into earnings announcements.

Recent Defense Releases

Textron Inc. (TXT - Free Report) reported second-quarter 2019 earnings from continuing operations of 93 cents per share, which surpassed the Zacks Consensus Estimate of 85 cents by 9.4%.

Lockheed Martin Corp. (LMT - Free Report) reported second-quarter 2019 earnings of $5 per share, which exceeded the Zacks Consensus Estimate of $4.74 by 5.5%.

Huntington Ingalls Industries, Inc.’s (HII - Free Report) second-quarter 2019 earnings of $3.07 per share missed the Zacks Consensus Estimate of $3.56 by 13.8%.

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