TDG changes
Pick any two versions below to diff them.
- Price
- $1123.97 → $1197.01(+6.5%)
- Next earnings
- Nov 4, 2026 → Nov 10, 2026
- Next earnings is estimate
- Yes → No
- Thesis
- The market prices TransDigm lower because of its high debt and the rising cost of that debt, while acquisitions dilute its margin. Total debt rose to $33.5 billion at June 27, 2026, from $30.0 billion at September 30, 2025, after new loans for acquisitions and buybacks. Net interest expense grew about 28% in the first nine months of fiscal 2026, faster than sales. The EBITDA As Defined margin fell to 52.8% in Q3 2026 from 54.4% a year earlier, because the newly bought businesses have lower margins. TransDigm also withdrew from the Stellant purchase in July 2026 because of the long regulatory review. The conflict in the Middle East softened airline capacity, although TransDigm has seen no large change in aftermarket orders. For the gap to close, three things must be true. TransDigm must reach its raised fiscal 2026 outlook of $10.47 to $10.55 billion of sales and $5.49 to $5.55 billion of EBITDA As Defined. Its fiscal 2027 outlook must show double-digit commercial aftermarket growth. The margins of Jet Parts Engineering, Victor Sierra and Prince & Izant must rise toward the group level, so that debt stays at about the same multiple of EBITDA. The first test is the fiscal Q4 report and the fiscal 2027 removed: outlook, expected in early added: outlook on November added: 10, 2026. If these checks pass, the gap can close over the next two to four quarters. The main risk is that a fall in air travel or higher interest rates hits a company with this much debt.
- Checkpoints
- Nov removed: 4, 2026 (estimate): added: 10, 2026: Fiscal Q4 2026 results and fiscal 2027 outlook. Pending. Watch: Fiscal 2026 results within the raised outlook and a fiscal 2027 outlook with double-digit commercial aftermarket growth pass; a lower outlook or a margin below 52% fails. Feb 2027 (estimate): Fiscal Q1 2027 results: margins of new businesses. Pending. Watch: A group EBITDA As Defined margin that rises again as the new businesses improve passes; a further fall in margin with higher interest costs fails.
- Recent events
- added: Nov 2, 2026: TransDigm said that it will report its fiscal Q4 2026 results before the market opens on November 10, 2026, with a conference call at 10:00 a.m. Eastern Time. Sep 28, 2026: TransDigm completed the purchase of Prince & Izant, a maker of brazing alloys and special metal parts for aircraft engines and other uses, for about $1.066 billion in cash from cash on hand. Sep 28, 2026: TransDigm issued $3.0 billion of 6.75% senior secured notes due 2035, up from a planned $2.5 billion. It uses the money to buy back all of its 6.75% secured notes due 2028 in a tender offer, and for general purposes. Sep 21, 2026: TransDigm's unit Extant Aerospace agreed to buy a portfolio of rotorcraft, land systems and business jet products, with a plant in California, for about $240 million in cash. It expects to close the deal in fiscal 2027. Aug 4, 2026: TransDigm reported fiscal Q3 2026 results. Net sales were $2.74 billion, up 23%, with 13% organic growth. Adjusted EPS was $10.87, up 13%. Commercial aftermarket sales grew 17%. TransDigm raised its fiscal 2026 outlook to net sales of $10.47 to $10.55 billion and adjusted EPS of $40.62 to $41.46. It bought back $1.0 billion of shares in the quarter at an average of $1,208 per share. Jul 13, 2026: TransDigm withdrew from its planned $960 million purchase of Stellant Systems. It said that the regulatory review was uncertain and would take too long compared with the time limit in the agreement. May 5, 2026: TransDigm reported fiscal Q2 2026 results and raised its fiscal 2026 outlook. Apr 17, 2026: TransDigm added $1.5 billion of debt: $500 million of 6.125% senior subordinated notes due 2034 and $1.0 billion of term loans due 2033. The money paid for about $800 million of share buybacks in March 2026 and for the Stellant purchase, which TransDigm later dropped.