A month has gone by since the last earnings report for TransDigm Group (TDG). Shares have added about 6.5% 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 its most recent earnings report in order to get a better handle on the important catalysts.

TransDigm Surpasses Q1 Earnings Estimates, Hikes '25 EPS View

TransDigm Group reported first-quarter fiscal 2025 adjusted earnings of $7.83 per share, which beat the Zacks Consensus Estimate of $7.48 by 4.7%. The bottom line also improved 9.4% from the prior-year quarter’s figure of $7.16 per share.

Barring one-time items, the company recorded GAAP earnings of $7.62 per share compared with $4.87 in the year-ago quarter.

The year-over-year growth in the bottom line was primarily driven by the increase in net sales and the application of the company’s value-driven operating strategy as well as lower non-cash stock and deferred compensation expense.

TransDigm’s Q1 Sales Discussion

Sales amounted to $2.01 billion, up 12.1% from $1.79 billion registered in the prior-year period. The reported figure also beat the Zacks Consensus Estimate of $1.99 billion by 0.6%.

Organic sales, as a percentage of net sales, grew 6.6%.

TDG’s Operating Results

The gross profit was $1.24 billion, up 18.5% from the year-ago quarter’s level of $1.04 billion.

TDG’s interest expense increased 26% year over year to $378 million.

Net income increased 29.1% year over year to $493 million.

TransDigm’s Financial Position

Cash and cash equivalents as of Dec. 28, 2024, amounted to $2.46 billion, down from $6.26 billion recorded as of Sept. 30, 2024.

Long-term debt totaled $24.30 billion, almost in line with $24.30 billion as of Sept. 30, 2024.

Cash from operating activities amounted to $752 million compared with $636 million at the end of the first quarter of fiscal 2024.

TDG’s 2025 Guidance

TransDigm partially revised its guidance for fiscal 2025. It still expects sales to be in the range of $8.75-$8.95 billion. The Zacks Consensus Estimate for the same is pegged at $8.86 billion, just above the midpoint of the company’s guided range.

TDG now expects fiscal 2025 adjusted earnings to be in the band of $35.51-$37.43 per share, higher than the prior guided range of $35.36-$37.28. The Zacks Consensus Estimate for TDG’s fiscal 2025 earnings is pegged at $37.08 per share, higher than the midpoint of its guided range.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

Currently, TransDigm has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. 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. Notably, TransDigm has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

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Transdigm Group Incorporated (TDG) : Free Stock Analysis Report

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

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