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Will Air Travel Demand Aid TransDigm's (TDG) Q3 Earnings?

TransDigm Group Incorporated TDG is slated to report third-quarter fiscal 2022 results on Aug 9, before market open.

TransDigm Group has a four-quarter earnings surprise of 6.61%, on average. Its fiscal third-quarter results are likely to be boosted by an improvement in commercial OEM (Original Equipment Manufacturer) and aftermarket revenues, thus adding impetus to the performance of the overall top line.

Power & Control Segment Poised to Boost Revenues

The continued recovery in the commercial aerospace industry must have boosted organic sales of TDG’s commercial OEM and commercial aftermarket businesses. This, in turn, is expected to have contributed to the company’s Power & Control segment revenues in the fiscal third quarter.

Also, solid bookings in the prior quarters are projected to have benefited defense revenues within this segment in the soon-to-be reported quarter.

The Zacks Consensus Estimate for the Power & Control segment’s third-quarter revenues, pegged at $731 million, suggests an improvement of 16.4% from the year-ago quarter’s reported figure.

Transdigm Group Incorporated Price and EPS Surprise

Transdigm Group Incorporated Price and EPS Surprise
Transdigm Group Incorporated Price and EPS Surprise

Transdigm Group Incorporated price-eps-surprise | Transdigm Group Incorporated Quote

Airframe Segment – Another Revenue Contributor

Solid air travel demand in recent times, particularly an increase in the utilization of narrow-body aircraft, must have bolstered top-line growth of the company’s Aiframe segment, in the soon-to-be-reported quarter.

The Zacks Consensus Estimate for the Airframe segment’s fiscal third-quarter revenues, pegged at $576 million, suggests an improvement of 4.7% from the year-ago quarter’s reported figure.

Third-Quarter Estimates

With the majority of TransDigm Group’s segments anticipated to report an improvement in sales, it makes one optimistic about strong growth in the top line of the company in the soon-to-be-reported quarter. The Zacks Consensus Estimate for fiscal third-quarter sales is pegged at $1.43 billion, indicating an increase of 17% from the prior-year reported figure.

TransDigm Group might reflect a favorable impact from cost management and its continuous focus on the operating strategy, which might have added impetus to its bottom line in the soon-to-be-reported quarter. Also, continued recovery in the company’s commercial aftermarket revenues are likely to have boosted quarterly margin, thereby benefiting TDG’s Q3 earnings.

The Zacks Consensus Estimate for third-quarter earnings is pegged at $4.46 per share, indicating an increase of 33.9% from the prior-year reported figure.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for TDG this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that is not the case here.

TransDigm Group has an Earnings ESP of -4.64% and a Zacks Rank #2. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Recent Defense Releases

Lockheed Martin Corporation LMT reported second-quarter 2022 earnings of $6.32 per share, which surpassed the Zacks Consensus Estimate of $6.29 by 0.5%. The bottom line, however, declined 1.6% year over year.

The company’s net sales amounted to $15.45 billion, which missed the Zacks Consensus Estimate of $16.16 billion by 4.4%. The top line also declined 9.3% from $17.03 billion reported in the year-ago quarter.

Hexcel Corporation HXL reported second-quarter 2022 adjusted earnings of 33 cents per share, which exceeded the Zacks Consensus Estimate of 30 cents by 10%.

The company’s net sales totaled $393 million, which beat the Zacks Consensus Estimate of $383 million by 2.6%. Moreover, the top line witnessed an improvement of 22.7% from the year-ago quarter’s $320.3 million.

Leidos Holdings, Inc.’s LDOS second-quarter 2022 adjusted earnings of $1.59 per share beat the Zacks Consensus Estimate of $1.55 by 2.6%. The bottom line also improved 4.6% from $1.52 per share registered a year ago.

The company generated total revenues of $3,597 million in the quarter under consideration, exceeding the Zacks Consensus Estimate of $3,514 million by 2.4%. The top line also improved 4.3% year over year.


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