Yahoo Finance Why Is TransDigm (TDG) Up 47.1% Since Last Earnings Report?
It has been about a month since the last earnings report for TransDigm Group (TDG). Shares have added about 47.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is TransDigm due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
TransDigm Q2 Earnings Beat Estimates, Sales Up Y/Y
TransDigm Group Incorporated reported second-quarter fiscal 2020 adjusted earnings of $4.97 per share, which surpassed the Zacks Consensus Estimate by 33.1%. Moreover, the bottom line increased 22.6% from $4.16 registered a year ago.
Barring one-time items, the company reported GAAP earnings of $5.63 per share compared with $3.56 in the year-ago quarter.
Sales
Net sales amounted to $1,443 million, reflecting growth of 23.5% from $1,168 million in the prior-year quarter. The reported figure also outpaced the Zacks Consensus Estimate of $1,429 million by 1%. Meanwhile, organic sales grew 4.8%.
Operating Results
Net income from continuing operations for the quarter increased 61.5% to $323 million compared with $200 million in the comparable quarter a year ago.
The effective tax rate was 4.2% compared with 24.2% for the comparable period in fiscal 2019.
Financial Position
TransDigm ended the second quarter of fiscal 2020 with cash and cash equivalents of $2,668 million, up from $1,467 million as of Sep 30, 2019. At the end of the reported quarter, the company’s long-term debt summed $17.93 billion, up from $16.47 billion as of Sep 30, 2019.
Cash from operating activities amounted to $594 million, as of Mar 28, 2020, compared with $453 million, as of Mar 30, 2019.
Fiscal 2020 Outlook
On Apr 2, 2020, the company withdrew its previously-provided financial guidance for the fiscal year ending Sep 30, 2020, due to the uncertainties concerning the ultimate impact of COVID-19 on the global market and economy.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -48.55% due to these changes.
VGM Scores
Currently, TransDigm has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise TransDigm has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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