TransDigm Group Incorporated Fundamental Analysis (NYSE: TDG)
TransDigm Group Incorporated (NYSE: TDG) shows moderate financial fundamentals with a PE ratio of 35.06, profit margin of 19.96%, and ROE of -21.90%. The company generates $10.1B in annual revenue with strong year-over-year growth of 11.23%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 84.2/100 based on profitability, valuation, growth, and balance sheet metrics. The B+ grade reflects solid fundamentals with room for improvement in valuation or growth.
Fundamental Health Score
We analyze TDG's fundamental strength across five key dimensions:
Efficiency Score
WeakTDG struggles to generate sufficient returns from assets.
Valuation Score
WeakTDG trades at a premium to fair value.
Growth Score
ExcellentTDG delivers strong and consistent growth momentum.
Financial Health Score
ExcellentTDG maintains a strong and stable balance sheet.
Profitability Score
ModerateTDG maintains healthy but balanced margins.
Key Financial Metrics
Is TDG Expensive or Cheap?
P/E Ratio
TDG trades at 35.06 times earnings. This suggests a premium valuation.
PEG Ratio
When adjusting for growth, TDG's PEG of 3.28 indicates potential overvaluation.
Price to Book
The market values TransDigm Group Incorporated at -7.17 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 6.95 times EBITDA. This is generally considered low.
How Well Does TDG Make Money?
Net Profit Margin
For every $100 in sales, TransDigm Group Incorporated keeps $19.96 as profit after all expenses.
Operating Margin
Core operations generate 45.57 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $-21.90 in profit for every $100 of shareholder equity.
ROA
TransDigm Group Incorporated generates $7.52 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
TransDigm Group Incorporated produces operating cash flow of $2.11B, showing steady but balanced cash generation.
Free Cash Flow
TransDigm Group Incorporated generates strong free cash flow of $1.85B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $33.45 in free cash annually.
FCF Yield
TDG converts 2.80% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
35.06
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
3.28
vs 25 benchmark
P/B Ratio
Price to book value ratio
-7.17
vs 25 benchmark
P/S Ratio
Price to sales ratio
6.52
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
-3.49
vs 25 benchmark
Current Ratio
Current assets to current liabilities
2.90
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
-0.22
vs 25 benchmark
ROA
Return on assets percentage
0.08
vs 25 benchmark
ROCE
Return on capital employed
0.19
vs 25 benchmark
How TDG Stacks Against Its Sector Peers
| Metric | TDG Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 35.06 | 27.44 | Worse (Expensive) |
| ROE | -21.90% | 1185.00% | Weak |
| Net Margin | 19.96% | -2.00% (disorted) | Strong |
| Debt/Equity | -3.49 | 0.85 | Strong (Low Leverage) |
| Current Ratio | 2.90 | 22.12 | Strong Liquidity |
| ROA | 7.52% | -1355419.00% (disorted) | Weak |
TDG outperforms its industry in 3 out of 6 key metrics, particularly excelling in Net Margin, but lagging in P/E Ratio.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews TransDigm Group Incorporated's 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
70.40%
Industry Style: Cyclical, Value, Infrastructure
High GrowthEPS CAGR
192.12%
Industry Style: Cyclical, Value, Infrastructure
High GrowthFCF CAGR
65.42%
Industry Style: Cyclical, Value, Infrastructure
High Growth