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TransDigm (TDG) Down 11.6% Since Last Earnings Report: Can It Rebound?

·3-min read

A month has gone by since the last earnings report for TransDigm Group (TDG). Shares have lost about 11.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is TransDigm due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

TransDigm's Q4 Earnings Beat Estimates, Sales Miss

TransDigm Group reported fourth-quarter fiscal 2021 adjusted earnings of $4.25 per share, which surpassed the Zacks Consensus Estimate of $3.72 by 14.3%. The bottom line also improved a solid 47.1% from $2.89 reported a year ago.

Barring one-time items, the company reported GAAP earnings of $3.58 per share compared with $1.76 generated in the year-ago quarter.

This year-over-year improvement can be attributed to an increase in net sales, a favorable sales mix and lower COVID-19 restructuring costs.

During fiscal 2021, the company reported adjusted earnings of $12.13 per share, which surpassed the Zacks Consensus Estimate of $11.59 by 4.7%. The bottom line however declined 16% from $14.47 reported a year ago.

Sales

Net sales amounted to $1,279 million in the fiscal fourth quarter, increasing 9% from $1,173 million in the prior-year quarter. The reported figure however missed the Zacks Consensus Estimate of $1,335 million by 4.2%.

During fiscal 2021, TransDigm reported net sales worth $4,798 million, which decreased 6% from $5,103 million in the prior year. The reported figure also missed the Zacks Consensus Estimate of $4,840 million by 0.9%.

Operating Results

Gross profit for the quarter surged 35.3% to $725 million from $536 million in the comparable quarter a year ago.
Consequently, income from operations increased 70.9% year over year to $535 million.

Financial Position

TransDigm ended fiscal 2021 with cash and cash equivalents of $4,787 million, up from $4,717 million as of Sep 30, 2020.

At the end of fiscal 2021, the company’s long-term debt was $19.37 billion, almost in line with the long-term debt level as of Sep 30, 2020.

Cash from operating activities amounted to $913 million as of Sep 30, 2021, compared with $1,213 million as of Sep 30, 2020.

Given the continued disruptions in TransDigm’s primary commercial end markets, thanks to the impact of the COVID-19 pandemic, the company did not provide fiscal 2022 guidance this time.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.


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