Will Recovering Air Travel Aid TransDigm (TDG) in Q4 Earnings?

TransDigm Group Incorporated TDG is slated to report fourth-quarter fiscal 2022 results on Nov 10, before market open.

TransDigm Group has a four-quarter earnings surprise of 5.95%, on average. Its fiscal third-quarter results are likely to be boosted by growth in air travel demand.

Power & Control Segment Poised to Boost Revenues

The continued recovery in the commercial aerospace industry, particularly the increase in the utilization of narrowbody aircraft and air cargo demand and the resulting higher flight hours, must have boosted organic sales of TDG’s commercial OEM and commercial aftermarket businesses in the fiscal fourth quarter. This, in turn, is expected to have contributed to the company’s Power & Control segment revenues in the yet-to-be-reported 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 fiscal fourth-quarter revenues, pegged at $802 million, suggests an improvement of 17.9% 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-eps-surprise | Transdigm Group Incorporated Quote

Airframe Segment – Another Revenue Contributor

Solid air travel demand in recent times, along with a higher volume of narrow-body aircraft deliveries by aircraft manufacturers to airlines, 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 fourth-quarter revenues, pegged at $654 million, suggests an improvement of 17.6% from the year-ago quarter’s reported figure.

Q4 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 fourth-quarter sales is pegged at $1.51 billion, indicating an increase of 18% from the prior-year reported figure.

TransDigm Group results might reflect a favorable impact of cost management. Its continuous focus on the operating strategy 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 is likely to have boosted quarterly margin, thereby benefiting TDG’s Q4 earnings.

The Zacks Consensus Estimate for fiscal fourth-quarter earnings is pegged at $5.04 per share, indicating an increase of 18.6% from the prior-year reported figure.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for TransDigm Group this time around. 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, this is not the case here.

Earnings ESP: The company’s Earnings ESP is +0.70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: TransDigm Group carries a Zacks Rank #4 (Sell), currently.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Recent Defense Releases

Leidos Holdings, Inc.’s LDOS third-quarter 2022 adjusted earnings of $1.59 per share beat the Zacks Consensus Estimate of $1.56 by 1.9%. However, the bottom line declined 11.7% from the $1.80 per share registered a year ago.

Leidos Holdings generated total revenues of $3,600 million in the quarter under consideration, exceeding the Zacks Consensus Estimate of $3,543.9 million by 1.6%. The top line also improved 4% year over year.

Northrop Grumman Corporation NOC reported third-quarter 2022 earnings of $5.89 per share, which missed the Zacks Consensus Estimate of $6.09 by 3.3%. The bottom line declined 11.2% from $6.63 reported in the year-ago quarter.

In the third quarter of 2022, Northrop Grumman reported total sales of $9 billion, which missed the Zacks Consensus Estimate of $9.15 billion by 1.6%. However, sales increased 3% from the year-ago quarter’s $8.7 billion.

Teledyne Technologies Inc. TDY reported third-quarter 2022 adjusted earnings of $4.54 per share, which surpassed the Zacks Consensus Estimate of $4.30 by 5.6%. The bottom line improved 4.6% from the year-ago quarter’s $4.34 per share.

Total sales in the third quarter amounted to $1,363.3 million, which came in line with the Zacks Consensus Estimate. The top line improved 3.9% from $1,311.9 million reported a year ago.

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