TransDigm Group Inc. TDG is a producer, supplier and designer of highly engineered aerospace components, systems and subsystems for use in commercial and military aircraft. Its rising earnings estimates, improving budget for defense, better solvency and strong liquidity offer a great investment opportunity in the Zacks Aerospace Defense Equipment industry.

Let’s focus on the reasons that make this Zacks Rank #2 (Buy) stock an investment opportunity at the moment.

TDG’s Growth Projections & Surprise History
 

The Zacks Consensus Estimate for TDG’s fiscal 2025 earnings per share (EPS) has increased 0.4% to $37.21 in the past 30 days. The Zacks Consensus Estimate for the company’s total revenues for fiscal 2025 is pegged at $8.87 billion, which indicates year-over-year growth of 11.7%.

TransDigm Group’s (three to five years) earnings growth is pegged at 13.5%. It delivered an average earnings surprise of 6.50% in the last four quarters.

TDG’s Solvency
 

TransDigm Group’s times interest earned ratio (TIE) at the end of the first quarter of fiscal 2025 was 2.7. The strong TIE ratio indicates that the company will be able to meet its interest payment obligations in the near term without any problems.

TDG’s Liquidity
 

The company’s current ratio at the end of the first quarter of fiscal 2025 was 2.70, higher than the industry’s average of 1.42. The ratio, being greater than one, indicates TransDigm’s ability to meet its future short-term liabilities without difficulties.

Rising Defense Budget
 

In August 2024, the U.S. Senate Committee on Appropriations approved the Fiscal Year 2025 Defense Appropriations Act, which provides $852.2 billion in total funding, indicating a 3.3% increase from fiscal 2024’s approved amount. TransDigm's products hold a significant position in the U.S. defense aerospace market. The company has been enjoying significant growth opportunities in the defense space due to the expansionary budgetary policy adopted by the U.S. administration and other developing nations in the past couple of years.

TDG Stock Price Performance
 

In the past month, TDG shares have rallied 3.6% against the industry’s decline of 1.8%.

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Other Stocks to Consider
 

A few other top-ranked stocks from the same industry are Leonardo DRS, Inc. DRS, Mercury Systems MRCY and FTAI Aviation Ltd. FTAI, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

DRS’ long-term earnings growth rate is pegged at 21.2%. The Zacks Consensus Estimate for the company’s total revenues for 2025 stands at $3.5 billion, which indicates year-over-year growth of 8.4%.

Mercury Systems’ long-term earnings growth rate is 13.2%. The Zacks Consensus Estimate for MRCY’s fiscal 2025 sales is pegged at $881.1 million, which implies an improvement of 5.5% from the fiscal 2024 reported figure.

The Zacks Consensus Estimate for FTAI’s 2025 EPS stands at $6.60 per share, which indicates growth of 2,162.5% from the previous year’s figure. The Zacks Consensus Estimate for FTAI’s total revenues for 2025 is pegged at $2.14 billion, which implies growth of 23.2% from the 2024 reported figure.

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Transdigm Group Incorporated (TDG) : Free Stock Analysis Report

Mercury Systems Inc (MRCY) : Free Stock Analysis Report

FTAI Aviation Ltd. (FTAI) : Free Stock Analysis Report

Leonardo DRS, Inc. (DRS) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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