February 20, 2025
Top 10 Stock TransDigm Hold Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: TransDigm – Top 10 Stock in Dow Jones U.S. Aerospace & Defense Index
TransDigm is listed as a top 10 stock on February 20, 2025 in the market index D.J. US Defense because of its high performance in at least one of the Obermatt investment strategies. Only one consolidated Obermatt Rank is above-average. The company enjoys a positive professional investor sentiment, but all financial facts speak against a stock purchase. This is probably an investment into the future. Based on the Obermatt 360° View of 34 (34% performer), Obermatt assesses an overall hold recommendation for TransDigm on February 20, 2025.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Aerospace & Defense |
| Index | D.J. US Defense, S&P 500 |
| Size class | X-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View TransDigm Hold
| 360 METRICS | February 20, 2025 | |||||||
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| VALUE | ||||||||
| VALUE | 17 |
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| GROWTH | ||||||||
| GROWTH | 49 |
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| SAFETY | ||||||||
| SAFETY | 37 |
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| SENTIMENT | ||||||||
| SENTIMENT | 67 |
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| 360° VIEW | ||||||||
| 360° VIEW | 34 |
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ANALYSIS: With an Obermatt 360° View of 34 (better than 34% compared with alternatives), overall professional sentiment and financial characteristics for the stock TransDigm are below the industry average. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for TransDigm. The consolidated Sentiment Rank has a good rank of 67, which means that professional investors are more optimistic about the stock than for 67% of alternative investment opportunities. But all other ranks are below average. The consolidated Value Rank has a rank of 17, which means that the share price of TransDigm is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. The consolidated Growth Rank also has a low rank of 49, meaning that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, invested capital growth, and stock returns. This means that growth is lower than for 49% of competitors in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 37 which means that the company has a riskier financing structure than 63% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more
RECOMMENDATION: With a consolidated 360° View of 34, TransDigm is worse than 66% of all alternative stock investment opportunities based on the Obermatt Method. As only the professional market sentiment (Sentiment Rank of 67) is above-average, and all other consolidated Obermatt Ranks are below peers, the stock investing proposition case is rather weak. The stock price is expensive for a company of this size in this industry, visible in the below-average Value Rank. Growth is below the competition based on the Growth Rank, and the company has more debt than other companies, according to the Safety Rank. So the question becomes: How important is the Sentiment Rank when all others are below average? When it comes to growth, the low rating might be justified if growth is expected in the future and not yet reflected in current performance. This is often the case for companies with intellectual property, such as technology and pharmaceutical companies. In the early phases, these companies are expensive compared with their size and may have a lot of debt on their books, as is the case here, as seen in the low Value and Safety Ranks. Future growth may be the strongest investment rationale in this case, which is only reflected by institutional investors' opinions. You pay more than the market average for this stock and invest in a rather debt-loaded enterprise, but it may be worth it if the future of TransDigṃ is bright. A small investment might be justified, but proceed with caution. ...read more
Sentiment Strategy: Professional Market Sentiment for TransDigm positive
ANALYSIS: With an Obermatt Sentiment Rank of 67 (better than 67% compared with alternatives), overall professional sentiment and engagement for the stock TransDigm is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for TransDigm. Analyst Opinions are at a rank of 76 (better than 76% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. In addition, Analyst Opinions Change has a rank of 67, which means that stock research experts are changing their opinions for the better in recommending investing in the company. In other words, they are getting even more optimistic about investments in TransDigm. Finally, the Professional Investors rank is 63, which means that currently, professional investors hold more stock in this company than in 63% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 67 (more positive than 67% compared with investment alternatives), TransDigm has a reputation among professional investors that is above-average compared with that of its competitors. Pros tend to favor investing in this company. But there is also a signal for caution. Market Pulse has a rank of 24, which means that the current professional news and professional social networks tend to be negative when discussing this company (more negative news than for 76% of competitors). This could mean future risks and should make investors careful. Attention to negative news for TransDigm is worthwhile because they may be early warning signals. Without those, all other professional signals are encouraging, especially since analysts are getting more optimistic. ...read more
Value Strategy: TransDigm Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 17 (worse than 83% compared with alternatives), TransDigm shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators where three out of four are below average for TransDigm. Only the Price-to-Book Capital ratio (also referred to as market-to-book ratio) indicates good stock value with a Price-to-Book Rank of 94, which means that the stock price is lower compared with invested capital than for 94% of comparable investments. All other value indicators are below the market median. Price-to-Sales is 3 which means the stock price compared with what market professionals expect for future profits is higher than 97% of comparable companies, indicating a low value concerning TransDigm's revenue levels. The same is valid for the Price-to-Book Capital ratio (also referred to as market-to-book ratio) with a Price-to-Book Rank of 94 and for the dividend yields rank which is lower than for 99% of comparable companies, making the stock more expensive as regards to with the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 17, is a sell recommendation based on TransDigm's stock price compared with the company's operational size and dividend yields. Why are market participants paying such a high price for TransDigm, where three out of four value indicators are below par? One reason could be that the company is well financed, indicated by the high book capital level, and has a promising future that is not yet visible in reported revenues and profits. That would also explain the low dividend yield because the company needs the cash to invest in its future. If investors can verify a picture in this sense, the stock may still be a good investment, even though current company-reported financials don't fully explain current stock prices. ...read more
Growth Strategy: TransDigm Growth Momentum low
| GROWTH METRICS | February 20, 2025 | |||||||
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| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 68 |
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| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 58 |
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| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 27 |
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| STOCK RETURNS | ||||||||
| STOCK RETURNS | 59 |
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| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 49 |
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ANALYSIS: With an Obermatt Growth Rank of 49 (better than 49% compared with alternatives), TransDigm shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for TransDigm. Sales Growth has a rank of 68 which means that currently, professionals expect the company to grow more than 68% of its competitors. Both Profit Growth, with a rank of 58, and Stock Returns, with a rank of 59, are also above average. But Capital Growth only has a rank of 27, which means that, currently, professionals expect the company to grow its invested capital less than 73% of its competitors. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 49, is a hold recommendation for growth and momentum investors. That may be a good sign if the company is already well positioned and doesn't require more investments at this time. They may focus on growing the top (revenues) and bottom (profits) lines, recently rewarded with above-average stock returns for shareholders. But it may also be a sign of danger as the company is falling back with capital investment activities concerning competition. This requires further analysis of corporate communications. ...read more
Safety Strategy: TransDigm Debt Financing Safety below-average
| SAFETY METRICS | February 20, 2025 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 1 |
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| REFINANCING | ||||||||
| REFINANCING | 24 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 100 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 37 |
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ANALYSIS: With an Obermatt Safety Rank of 37 (better than 37% compared with alternatives), the company TransDigm has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of TransDigm is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for TransDigm. Liquidity is at 100, meaning the company generates more profit to service its debt than 100% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 24, which means that the portion of the debt that is about to be refinanced is above average. It has more debt in the refinancing stage than 76% of its competitors. Leverage is also high at a rank of 1, which means that the company has an above-average debt-to-equity ratio. It has more debt than 99% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 37 (worse than 63% compared with alternatives), TransDigm has a financing structure that is riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. ...read more
Combined financial peformance: TransDigm Lowest Financial Performance
| COMBINED PERFORMANCE | February 20, 2025 | |||||||
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| VALUE | ||||||||
| VALUE | 17 |
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| GROWTH | ||||||||
| GROWTH | 49 |
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| SAFETY | ||||||||
| SAFETY | 100 |
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| COMBINED | ||||||||
| COMBINED | 10 |
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ANALYSIS: With an Obermatt Combined Rank of 10 (worse than 90% compared with investment alternatives), TransDigm (Aerospace & Defense, USA) shares have lower financial characteristics compared with similar stocks. Shares of TransDigm are low in value (priced high) with a consolidated Value Rank of 17 (worse than 83% of alternatives), show below-average growth (Growth Rank of 49), and are riskily financed (Safety Rank of 37), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 10, is a sell recommendation based on TransDigm's financial characteristics. As the company TransDigm's key financial metrics all exhibit below-average performance, such as low value (Obermatt Value Rank of 17), low growth (Obermatt Growth Rank of 49), and risky financing practices (Obermatt Safety Rank of 37), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. Such poor financial performance sometimes indicates that the company's business is all concentrated in some distant future. This is sometimes the case for high-tech or biotechnology companies. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and risky today. In such cases, the Obermatt Method has limited value as it is based on facts we can observe today. If the facts are all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that should only amount to a small fraction of a safe portfolio. ...read more
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