TransDigm Group Incorporated (NYSE:TDG) stock rose Tuesday after the aerospace supplier reported better-than-expected fiscal fourth-quarter 2026 results.
The company reported adjusted earnings of $12.44 per share, beating the analyst estimate of $12.21.
Revenue jumped 23% year over year to $2.99 billion, topping the Wall Street estimate of $2.95 billion. GAAP earnings rose to $10.33 per share from $7.75 a year earlier.
TransDigm Profit Margins Face Pressure
Organic sales grew 14%. However, net income fell 4% to $586 million as higher interest and tax expenses weighed on profits.
Adjusted net income increased 12% to $706 million.
Gross profit reached $1.76 billion, while gross margin narrowed to 59% from 60.3%.
Adjusted EBITDA, measured as EBITDA As Defined, rose 20% to $1.58 billion. However, the margin fell to 53% from 54.2%.
Recent acquisitions reduced the margin by about two percentage points.
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Commercial Aerospace Demand Drives Growth
Commercial aftermarket revenue rose 17% on a pro forma basis, while commercial original equipment manufacturer (OEM) revenue increased 15%. Defense revenue grew 12%.
Commercial transport OEM revenue surged 25%, while aftermarket revenue climbed 16%.
Business jet and helicopter aftermarket revenue increased 21%, while OEM revenue remained flat.
TransDigm Deploys More Than $7 Billion
TransDigm generated $2.19 billion in operating cash flow during fiscal 2026. It ended September with $2.28 billion in cash.
The company deployed more than $7 billion through acquisitions and share buybacks, including $4.4 billion in acquisitions and $2.8 billion in repurchases.
Fourth-quarter buybacks totaled $943 million.
TransDigm also completed its approximately $1.07 billion acquisition of Prince & Izant during the quarter.
Fiscal 2027 Earnings Forecast Falls Short
TransDigm forecasts fiscal 2027 adjusted earnings of $47.09 to $47.94 per share, below the analyst estimate of $48.80.
The outlook also signals continued pressure on profit margins. TransDigm expects its adjusted EBITDA margin to narrow to about 52% in fiscal 2027 from 52.7% in fiscal 2026.
The company expects GAAP earnings of $42.06 to $42.91 per share, also below the Wall Street estimate of $44.52.
However, its revenue forecast of $11.95 billion to $12.15 billion exceeds the $11.80 billion estimate.
At the midpoint, TransDigm expects revenue to grow 14% and adjusted earnings per share to rise 15%.
TDG Price Action: TransDigm Group shares were up 1.53% at $1237.52 at the time of publication on Tuesday, according to Benzinga Pro data.
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