What's in Store for TransDigm Group (TDG) in Q1 Earnings?

Transdigm Group Incorporated TDG is set to report first-quarter fiscal 2020 results on Feb 4, before market open.

In the last reported quarter, the company delivered a positive earnings surprise of 12.37%. Moreover, it surpassed the Zacks Consensus Estimate in the trailing four quarters, delivering positive earnings surprise of 10.63% on average.

Let’s see how things have shaped up prior to this announcement.

Factors at Play

Revenue passenger miles (RPM), a key growth factor boosting Transdigm’s commercial aftermarket sales, witnessed moderate growth during the October-December quarter. An expanded defense budget along with increased geopolitical tensions across the globe, especially in Iran, is expected to have boosted the company’s defense sales in the soon-to-be-reported quarter.

Apart from these organic sales contributions, positive synergies from the Esterline buyout are expected to have contributed to Transdigm Group’s top and bottom lines in the to-be-reported quarter.

The Zacks Consensus Estimate for fiscal first-quarter revenues is pegged at $1,458 million, indicating an improvement of 46.1% from first-quarter fiscal 2019.

Transdigm Group Incorporated Price and EPS Surprise

Transdigm Group Incorporated Price and EPS Surprise

Transdigm Group Incorporated price-eps-surprise | Transdigm Group Incorporated Quote

However, commercial OEM market sales are expected to reflect signs of weakness primarily due to Boeing’s BA 737 MAX production rate cuts in the to-be-reported quarter results.

Solid revenue growth along with positive contributions from Esterline is expected to have boosted the company’s fiscal first-quarter earnings.

The Zacks Consensus Estimate stands at $4.56 per share, implying 18.4% growth from the year-ago quarter’s reported figure.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Transdigm Group in the fiscal first quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Transdigm Group has an Earnings ESP of +0.51% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks to Consider

Here are some defense companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:

Heico Corporation HEI is expected to release fourth-quarter 2019 results soon. The company has an Earnings ESP of +8.94% and a Zacks Rank #1.

Aerojet Rocketdyne Holdings AJRD is expected to release fourth-quarter 2019 results soon. The company has an Earnings ESP of +2.17% and a Zacks Rank #3.

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