Trading Idea: Transdigm (TDG-US)
14/10/2021
We had an Enter Long Strategic signal on August 17, 2020, triggered by our system on Transdigm Group, TDG-US, the US Aerospace & Defence company.
Our system also triggered an Enter Long Tactical signal on September 17, 2021 that imply a likely bullish acceleration. Transdigm has a rather strong track record, with a Behavioral score of 8/10, therefore the bullish signal is to be considered as Strategic.
Transdigm is a $ 35.5 Bn market cap producer and supplier of engineered aircraft components for use on commercial and military aircraft in service. The Company operates through three segments: Power & Control, Airframe and Non-aviation. The Power & Control segment includes operations that primarily develop, produce and market systems and components that provide power to or control power of the aircraft utilizing electronic, fluid, power and mechanical motion control technologies. The Airframe segment includes operations that primarily develop systems and components that are used in non-power airframe applications utilizing airframe and cabin structure technologies. The Non-aviation segment includes operations that primarily develop products for non-aviation markets. Its product offerings include mechanical/electro-mechanical actuators and controls, hydraulic actuators and fuel valves, and seat belts and safety restraints.
Q3 results showed signs of recovery, with strong margins and improving revenues. The strong bounce back in sales si due to the fact that 90% of Company's sales are generated by proprietary products. Additionally, 75% of Transdigm sales come from products for which it is the sole source provider. This basically guarantees high pricing power. Furthermore, most of its EBITDA comes from aftermarket revenues, which tend to have significantly higher margins and - above all - tend to be more stable in downturns.
Revenues for the fiscal 09/2022 are expected to exceed the 2019 level and reach $5.46 Bn, coupled with a 39% operating margin. EPS are expected to grow by double digit in the next 3 years. The company currently offers a 2.9% dividend yield.
Short term catalyst : Dividend yield, acquisitions, airlines trafic recovery.
This signal looks consistent with the US Aerospace & Defense sector. The participation of US Aerospace & Defence stocks in tactical signal is currently at 62% and 62% for the Strategic signal.
Our system also triggered an Enter Long Tactical signal on September 17, 2021 that imply a likely bullish acceleration. Transdigm has a rather strong track record, with a Behavioral score of 8/10, therefore the bullish signal is to be considered as Strategic.
Transdigm is a $ 35.5 Bn market cap producer and supplier of engineered aircraft components for use on commercial and military aircraft in service. The Company operates through three segments: Power & Control, Airframe and Non-aviation. The Power & Control segment includes operations that primarily develop, produce and market systems and components that provide power to or control power of the aircraft utilizing electronic, fluid, power and mechanical motion control technologies. The Airframe segment includes operations that primarily develop systems and components that are used in non-power airframe applications utilizing airframe and cabin structure technologies. The Non-aviation segment includes operations that primarily develop products for non-aviation markets. Its product offerings include mechanical/electro-mechanical actuators and controls, hydraulic actuators and fuel valves, and seat belts and safety restraints.
Q3 results showed signs of recovery, with strong margins and improving revenues. The strong bounce back in sales si due to the fact that 90% of Company's sales are generated by proprietary products. Additionally, 75% of Transdigm sales come from products for which it is the sole source provider. This basically guarantees high pricing power. Furthermore, most of its EBITDA comes from aftermarket revenues, which tend to have significantly higher margins and - above all - tend to be more stable in downturns.
Revenues for the fiscal 09/2022 are expected to exceed the 2019 level and reach $5.46 Bn, coupled with a 39% operating margin. EPS are expected to grow by double digit in the next 3 years. The company currently offers a 2.9% dividend yield.
Short term catalyst : Dividend yield, acquisitions, airlines trafic recovery.
This signal looks consistent with the US Aerospace & Defense sector. The participation of US Aerospace & Defence stocks in tactical signal is currently at 62% and 62% for the Strategic signal.