TransDigm Group Incorporated Beat Revenue Forecasts By 6.5%: Here's What Analysts Are Forecasting 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. It was a workmanlike result, with revenues of US$1.8b coming in 6.5% ahead of expectations, and statutory earnings per share of US$4.87, in line with analyst appraisals. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for TransDigm Group

After the latest results, the 21 analysts covering TransDigm Group are now predicting revenues of US$7.71b in 2024. If met, this would reflect a notable 10% improvement in revenue compared to the last 12 months. Per-share earnings are expected to ascend 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 small dip in their earnings per share numbers for next year.

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. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against 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 biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for TransDigm Group. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. 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..

However, before you get too enthused, we've discovered 3 warning signs for TransDigm Group (2 are a bit unpleasant!) that you should be aware of.

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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.