MMarketMath

TDG

StalwartQuality: Medium (65/100)1 red flag

TransDigm Group · Industrials · Aerospace & Defense

$1,199.08

52w 1,123.61 – 1,463.03

20y monthly, adjusted

Mkt cap

$66.3B

P/E

32.6

P/FCF

37.2

FCF yield

2.7%

ROE

-21.4%

Shldr yield

1.0%

div 0.2% + bb 0.7%

What today's price assumes

At $66.3B, the market is pricing in 16.2% annual free-cash-flow growth for the next decade (10% discount rate, 2.5% terminal growth). Over the last ten years, FCF actually grew 14.6% per year — the price asks for acceleration beyond the historical record.

Simple DCF per-share range: $501 · $1,088 · $1,356 (4% / base / optimistic growth). An estimate, not a target.

Adjust the assumptions yourself →

Historical multiple lens

At its own median P/OCF of 20.2× across 12 years, TDG would trade near $744/share (25th–75th percentile: $514–$1,141); it trades at 32.5× today.

Assumes the historical multiple regime persists — re-ratings can be permanent.

Growth record

Compound annual growth rates from as-filed 10-K data, split-adjusted

Rev 3y

+17.6%

Rev 5y

+11.6%

Rev 10y

+12.6%

EPS 5y

+29.1%

EPS 10y

+15.1%

FCF 5y

+10.4%

FCF 10y

+14.6%

Fundamentals

Fiscal 2008–2025, from SEC filings

Revenue

2008: $713.7M
2009: $761.6M
2010: $827.7M
2011: $1.2B
2012: $1.7B
2013: $1.9B
2014: $2.4B
2015: $2.7B
2016: $3.2B
2017: $3.5B
2018: $3.8B
2019: $5.2B
2020: $5.1B
2021: $4.8B
2022: $5.4B
2023: $6.6B
2024: $7.9B
2025: $8.8B
$0$2.5B$5.0B$7.5B
08
11
14
17
20
23

Net income

2008: $133.1M
2009: $162.9M
2010: $163.4M
2011: $172.1M
2012: $325.0M
2013: $302.8M
2014: $306.9M
2015: $447.2M
2016: $586.4M
2017: $596.9M
2018: $957.0M
2019: $890.0M
2020: $699.0M
2021: $680.0M
2022: $866.0M
2023: $1.3B
2024: $1.7B
2025: $2.1B
$0$1.0B$2.0B
08
11
14
17
20
23

Free cash flow

2008: $178.8M
2009: $184.0M
2010: $184.4M
2011: $242.4M
2012: $388.6M
2013: $434.7M
2014: $507.1M
2015: $466.1M
2016: $639.3M
2017: $717.7M
2018: $949.0M
2019: $913.0M
2020: $1.1B
2021: $808.0M
2022: $829.0M
2023: $1.2B
2024: $1.9B
2025: $1.8B
$0$500.0M$1.0B$1.5B
08
11
14
17
20
23

Diluted shares (lower is better)

2014: 52.7M
2015: 53.1M
2016: 53.3M
2017: 52.5M
2018: 52.3M
2019: 53.1M
2020: 57.3M
2021: 58.4M
2022: 58.2M
2023: 57.2M
2024: 57.8M
2025: 58.2M
020.0M40.0M
08
11
14
17
20
23

Margins

20%40%60%081114172023
Net marginFCF marginGross margin

Capital returned (dividends + buybacks)

2009: $15.2M
2010: $404.9M
2011: $2.8M
2012: $4.1M
2013: $2.0B
2014: $1.6B
2015: $3.4M
2016: $210.8M
2017: $3.0B
2018: $56.0M
2019: $1.7B
2020: $1.9B
2021: $73.0M
2022: $2.0B
2023: $38.0M
2024: $2.0B
2025: $659.0M
$0$1.0B$2.0B
08
11
14
17
20
23

Cash vs long-term debt

$0$10.0B$20.0B$30.0B081114172023
CashLT debt

Quarterly

Discrete quarters from 10-Q filings; Q4 derived as fiscal year minus Q1–Q3. OCF is unwound from the year-to-date figures 10-Qs report. Compare to the same quarter a year ago — most businesses are seasonal.

Revenue by quarter

Q3'23: $1.7B
Q4'23: $1.9B
Q1'24: $1.8B
Q2'24: $1.9B
Q3'24: $2.0B
Q4'24: $2.2B
Q1'25: $2.0B
Q2'25: $2.1B
Q3'25: $2.2B
Q4'25: $2.4B
Q1'26: $2.3B
Q2'26: $2.5B
Q3'26: $2.7B
$0$1.0B$2.0B
23
24
25
25
26

Net income by quarter

Q3'23: $351.0M
Q4'23: $415.0M
Q1'24: $382.0M
Q2'24: $403.0M
Q3'24: $461.0M
Q4'24: $468.0M
Q1'25: $493.0M
Q2'25: $479.0M
Q3'25: $492.0M
Q4'25: $610.0M
Q1'26: $445.0M
Q2'26: $535.0M
Q3'26: $539.0M
$0$200.0M$400.0M$600.0M
23
24
25
25
26
QuarterRevenueYoYNet incomeYoYEPSOCF
Q3'26$2.7B+22.5%$539.0M+9.6%9.39$724.0M
Q2'26$2.5B+18.3%$535.0M+11.7%9.20$135.0M
Q1'26$2.3B+13.9%$445.0M−9.7%6.62$832.0M
Q4'25 *$2.4B+11.5%$610.0M+30.3%7.75$507.0M
Q3'25$2.2B+9.3%$492.0M+6.7%8.47$631.0M
Q2'25$2.1B+12.0%$479.0M+18.9%8.24$148.0M
Q1'25$2.0B+12.1%$493.0M+29.1%7.62$752.0M
Q4'24 *$2.2B+18.0%$468.0M+12.8%5.82$572.0M
Q3'24$2.0B+17.3%$461.0M+31.3%7.96$608.0M
Q2'24$1.9B+20.5%$403.0M+32.6%6.97$229.0M
Q1'24$1.8B+28.1%$382.0M+67.5%4.87$636.0M
Q4'23 *$1.9B+22.6%$415.0M+56.0%7.24$462.0M
Q3'23$1.7B+24.7%$351.0M+47.5%6.14$406.0M

Track record

Compound annual growth by period. For debt and share count, negative is the good direction.

Series3y5y10y15y
Revenue+17.6%+11.6%+12.6%+17.1%
Operating cash flow+29.1%+10.9%+14.6%+16.8%
Free cash flow+29.9%+10.4%+14.6%+16.5%
EPS (diluted)+33.8%+29.1%+15.1%+18.5%
Equity+14.2%———
LT debt+14.6%+8.6%+13.7%+20.6%
Diluted shares0.0%+0.3%+0.9%—
Stock price+15.8%+18.9%+21.0%+25.6%

$100, 3 years ago

$155vs $176 in SPY

15.8% vs 20.7%/yr

$100, 5 years ago

$237vs $181 in SPY

18.9% vs 12.6%/yr

$100, 10 years ago

$673vs $412 in SPY

21.0% vs 15.2%/yr

$100, 15 years ago

$3,040vs $813 in SPY

25.6% vs 15.0%/yr

The $1 test — market value created per $1 of earnings retained (Buffett's hurdle: at least $1)

Last 5 years

$16.52

$53.4B created / $3.2B retained

Last 10 years

$101.00

$68.9B created / $681.7M retained

Quality & capital discipline

Cash-based returns and how management deploys capital

Cash ROIC

10.4%

OCF ÷ (equity + debt)

OCF / EV yield

2.2%

MC vs 10× OCF

3.32

≤1 = priced under 10× OCF

Debt / FCF

16.1y

SBC / FCF

8.4%

Owner earnings

$1.7B

OCF − capex − SBC

OE yield

2.5%

Share count 5y

+0.9%

per year; negative = buybacks

Capital intensity

17.9%

net PP&E ÷ revenue

Sales efficiency

$0.22

new PP&E per $1 new revenue, 5y

Growth engine (5y): reinvested 83.4% of operating cash flow at an incremental return of 13.5% — an organically fundable growth rate of about 11.3% per year (growth ≈ reinvestment rate × incremental ROIC).

Checklist

15 of 26 checks pass · 58%. Checks with structurally missing inputs are excluded.

Growth & Consistency

7/7

  • Revenue growth

    11.6% · 5y CAGR ≥ 5%

    pass

  • EPS growth

    29.1% · 5y CAGR ≥ 5%

    pass

  • FCF growth

    10.4% · 5y CAGR ≥ 5%

    pass

  • Revenue rises consistently

    7 of 9 · up in ≥ 7 of last 10 years

    pass

  • FCF consistently positive

    10 of 10 · positive in ≥ 8 of last 10 years

    pass

  • Profitable every year

    10 of 10 · net income > 0 in ≥ 8 of last 10

    pass

  • Cash flow keeps up with sales

    10.9% vs 11.6% · OCF CAGR ≥ 0.9× revenue CAGR

    pass

Profitability

4/7

  • Net margin

    23.5% · ≥ 8%

    pass

  • Operating margin

    47.2% · ≥ 10%

    pass

  • Gross margin stable or rising

    60.1% vs 57.1% · no drop > 2 pts over 3y

    pass

  • Return on equity

    -21.4% · ≥ 12%

    fail

  • Cash ROIC

    10.4% · ≥ 12%

    fail

  • FCF margin

    20.6% · ≥ 5%

    pass

  • Earnings back their cash

    OCF $2.0B vs NI $2.1B · OCF ≥ net income (latest FY)

    fail

Balance Sheet

1/4

  • Debt payable from cash flow

    16.1y · LT debt ≤ 3× FCF

    fail

  • Cash cushion

    10% · cash ≥ 50% of LT debt

    fail

  • Leverage

    -3.02 · LT debt ≤ 1.5× equity

    pass

  • Equity positive and compounding

    −$9.7B · equity > 0 and grew over ~5y

    fail

  • Interest burden

    — · interest ≤ 15% of operating income

    na

Capital Allocation

3/4

  • Share count flat or shrinking

    0.9% · ≤ +0.5%/yr over ~5y

    fail

  • Stock comp restrained

    8% · SBC ≤ 15% of FCF

    pass

  • Distributions funded by FCF

    36% · dividends + buybacks ≤ 100% of FCF

    pass

  • Repurchases are a habit

    5 of 10 · buybacks in ≥ 5 of last 10 years

    pass

Valuation Discipline

0/4

  • FCF yield

    2.7% · ≥ 3%

    fail

  • Earnings multiple

    32.6 · P/E ≤ 25

    fail

  • Price asks less than history delivered

    16.2% vs 14.6% · implied FCF growth ≤ historical FCF CAGR

    fail

  • Shareholder yield

    1.0% · dividends + buybacks ≥ 2% of market cap

    fail

Red flags

Mechanical checks — a flag is a question to investigate, not a verdict

Heavy debt load

Long-term debt exceeds 5 years of free cash flow.

Financial data

As filed in 10-Ks; per-share figures split-adjusted. $ in millions.

FYRevenueGross profitOp incomeNet incomeEPSOCFCapExFCFDividendsBuybacksSBCCashLT debtEquityShares
20258,8315,3114,1652,07432.082,0382221,8161595001522,80829,291-9,68658
20247,9404,6723,5311,71425.622,0451651,8802,03801886,26124,394-6,29058
20236,5853,8422,9231,29822.031,3751391,2363801353,47219,401-1,98457
20225,4293,0992,21586613.409481198291,0919121533,00119,445-3,77358
20214,7982,5131,69168010.419131058087301294,78719,649-2,91658
20205,1032,6471,7516998.961,2131051,1081,92819934,71719,384-3,97257
20195,2232,8091,92689013.841,0151029131,7120931,46716,469-2,89453
20183,8112,1771,65595716.201,02273949560592,07312,502-1,80852
20173,5041,9851,4835977.88789717182,5823904665111,394-2,95153
20163,1711,7281,26858610.39683446393208481,5879,943-65153
20152,7071,4501,0744477.845215546630327148,106-1,03853
20142,3731,2689283073.16541345071,451160268207,234-1,55653
20131,9241,0507493032.39470364351,9910495655,700-336—
20121,7009467003255.974142538931224413,5991,219—
20111,2066614871723.17260182423—133763,123811—
20108284733631632.5219713184405—72341,772593—
20097624293351633.1019713184—1561901,357819—
2008714386299133—19011179——4159—654—

Some concepts are structurally absent for certain industries (banks report no gross profit or capex). Missing ≠ zero.

Compare with peers →·10-K filings on EDGAR ↗