TransDigm Stock at Support Zone – Bargain or Trap?
TransDigm (TDG) stock should be on your watchlist. Here is why – it is currently trading in the support zone ($1,202.99 – $1,329.63), levels from which it has bounced meaningfully before. In the last 10 years, TransDigm stock received buying interest at this level 3 times and subsequently went on to generate 11.0% in average peak returns.
| Peak Return | Days to Peak Return | |
|---|---|---|
| 1/16/2025 | 3.2% | 14 |
| 2/24/2025 | 6.6% | 37 |
| 4/9/2025 | 23.1% | 112 |
But is the price action enough alone? It certainly helps if the fundamentals check out. For TDG Read Buy or Sell TDG Stock to see how convincing this buy opportunity might be.
No matter where TDG stock goes, your portfolio should stay on track. See how High Quality Portfolio can help you do that.
Here are some quick data points for TransDigm that should help decision:
- Revenue Growth: 12.8% LTM and 18.2% last 3 year average.
- Cash Generation: Nearly 22.2% free cash flow margin and 46.4% operating margin LTM.
- Recent Revenue Shocks: The minimum annual revenue growth in last 3 years for TDG was 12.8%.
- Valuation: TDG stock trades at a PE multiple of 38.1
For quick background, TransDigm provides aircraft components including mechanical actuators, ignition systems, engineered latches, connectors, sealing solutions, and safety restraints for ground transportation applications.
| TDG | S&P Median | |
|---|---|---|
| Sector | Industrials | – |
| Industry | Aerospace & Defense | – |
| PE Ratio | 38.1 | 23.8 |
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| LTM* Revenue Growth | 12.8% | 5.6% |
| 3Y Average Annual Revenue Growth | 18.2% | 5.3% |
| Min Annual Revenue Growth Last 3Y | 12.8% | -0.0% |
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| LTM* Operating Margin | 46.4% | 18.8% |
| 3Y Average Operating Margin | 45.1% | 18.2% |
| LTM* Free Cash Flow Margin | 22.2% | 13.4% |
*LTM: Last Twelve Months
What Is Stock-Specific Risk If The Market Crashes?
TDG isn’t immune to big drops either. It sank 63% during the Covid pandemic and 52% in the Global Financial Crisis. The 2018 correction hit it by nearly 18%, and the inflation shock caused about a 25% dip. These numbers show that even with strong fundamentals, TDG can take a serious hit when market stress hits. It’s a reminder that risk is always there, no matter how promising a stock looks.
But the risk is not limited to major market crashes. Stocks fall even when markets are in good shape – think events like earnings, business updates, outlook changes. Read TDG Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.