On Nov 15, Zacks Investment Research upgraded TransDigm Group Incorporated (TDG) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
TransDigm Group has been witnessing rising earnings estimates on the back of strong fiscal fourth-quarter 2013 results, an improved fiscal 2014 guidance and positive synergies from acquisitions. Moreover, this well-known designer, producer and supplier of highly engineered aircraft components delivered positive earnings surprises in 3 of the last 4 quarters with an average beat of 42.1%. The long-term expected earnings growth rate for this stock is 14.5%
TransDigm Group reported fiscal fourth-quarter fiscal 2013 adjusted earnings per share of $1.75, which stormed past the Zacks Consensus Estimate of loss of 18 cents. Net sales in the quarter totaled $539.7 million, representing a year-over-year increase of 16.7%. Organic net sales growth rose 5.6% from the prior-year period, driven by increase in volumes from commercial original equipment manufacturer (OEM) and defense.
TransDigm expects to reap positive synergies from its three recent acquisitions and has provided a positive outlook for fiscal 2014. Adjusted earnings per share in fiscal 2014 are expected to be in the range of $7.00 to $7.32, as compared with fiscal 2013 earnings of $6.90 per share. Net sales are projected to be in the range of $2.1–$2.2 billion in fiscal 2014 compared with revenues of $1.9 billion in fiscal 2013.
The Zacks Consensus Estimate for the first quarter of 2014 has gone up 2.7% to $1.54 per share as most of the estimates were revised higher over the last 7 days. For fiscal 2014, estimate is within the guidance range provided by TransDigm at $7.26, reflecting a 5.4% increase in the Zacks Consensus Estimate.
Alliant Techsystems (ATK), Hexcel Corp. (HXL) and Teledyne Technologies Inc. (TDY) are also worth a look. While Alliant carries a Zacks Rank #1 (Strong Buy), Hexcel and Teledyne Technologies carry a Zacks Rank #2 (Buy).
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