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TransDigm Group Incorporated Just Beat Revenue By 6.5%: Here's What Analysts Think Will Happen Next

Last week saw the newest first-quarter earnings release from TransDigm Group Incorporated (NYSE:TDG), an important milestone in the company's journey to build a stronger business. Results overall were respectable, with statutory earnings of US$4.87 per share roughly in line with what the analysts had forecast. Revenues of US$1.8b came in 6.5% ahead of analyst predictions. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for TransDigm Group

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earnings-and-revenue-growth

Taking into account the latest results, the current consensus from TransDigm Group's 21 analysts is for revenues of US$7.71b in 2024. This would reflect a meaningful 10% increase on its revenue over the past 12 months. Per-share earnings are expected to expand 12% to US$27.31. Before this earnings report, the analysts had been forecasting revenues of US$7.63b and earnings per share (EPS) of US$28.17 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

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Althoughthe analysts have revised their earnings forecasts for next year, they've also lifted the consensus price target 7.3% to US$1,182, suggesting the revised estimates are not indicative of a weaker long-term future for the business. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic TransDigm Group analyst has a price target of US$1,380 per share, while the most pessimistic values it at US$705. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting TransDigm Group's growth to accelerate, with the forecast 14% annualised growth to the end of 2024 ranking favourably alongside historical growth of 6.3% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.5% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that TransDigm Group is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for TransDigm Group going out to 2026, and you can see them free on our platform here..

And what about risks? Every company has them, and we've spotted 3 warning signs for TransDigm Group (of which 2 are potentially serious!) you should know about.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.