Today, we’re going to talk about TransDigm Group, whose shares are among the top five growth leaders over the past 3 months.
TransDigm Group published its latest report for 4th quarter 2023 on 9 November. Manufacturing costs make up 42% of the revenue structure, and gross revenues make up 58%. In the last quarter, the company made a profit of $414 million. Market capitalization is now $53 billion.
Almost no aircraft in the world would leave the assembly line without the TransDigm Group.The company is a key contractor for manufacturers of fighter jets and combat helicopters, and therefore 38% of its revenue comes from the US defense industry. In addition, TransDigm supplies key landing gear, engine and electrical system components to Boeing and Airbus.
TransDigm Group operates in the aerospace and defense industry. It was founded in 1993. It was listed on the NASDAQ in 2006 and included in the S&P 500 Index in 2016. For the past 5 years, the company has been headed by Kevin Stein and a team of qualified managers.
TransDigm’s main competitors are General Dynamics, L3 Harris and Teledyne Technologies. As you can see from the table above, some of them are ahead of TransDigm Group in terms of capitalization, but the company has a few competitive advantages.
TransDigm’s strengths are based on the fact that it is a portfolio holding company. It acquires and develops specific and niche businesses, has a broad range of products and is not focused on a single segment. As a result, it generates around 90% of its sales from unique, patented products. And in some narrow sub-industries it has a near monopoly position.
Over the past 3 months, TransDigm Group’s stock has risen by +14.1%. At the same time, the industrials sector in which the company is a part has fallen by -4.9% and the S&P 500 index has fallen by -1.1%. As you can see, even during periods of market correction, TransDigm Group’s stock have shown more resilience than the sector average.
