TDG Should I Buy
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TransDigm Group Inc (TDG) is not a strong buy for a beginner, long-term investor at this time. While the company has shown revenue growth and maintains strong EBITDA margins, the recent financial performance shows a decline in net income, EPS, and gross margins. Additionally, technical indicators suggest a bearish trend, and the options data reflects a bearish sentiment with a high Put-Call ratio. Analysts' ratings are mixed, with some downgrades and lowered price targets citing concerns about margin pressure and aftermarket growth deceleration. Given the investor's preference for long-term stability and the absence of strong positive catalysts, it is better to hold off on buying TDG at this moment.
The technical indicators for TDG suggest a bearish trend. The MACD histogram is negative and contracting, the RSI is neutral at 35.941, and the moving averages are bearish (SMA_200 > SMA_20 > SMA_5). The stock is trading below the key pivot level of 1335.983, with support at 1261.466 and resistance at 1410.499.
Revenue growth of 13.91% YoY in Q1
Strong EBITDA margins despite recent headwinds.
Recent acquisitions (Stellant Systems and Jet Parts Engineering) align with the company's aftermarket-focused model and offer long-term growth potential.
Decline in net income (-13.06% YoY) and EPS (-12.99% YoY) in Q1
Gross margin contraction by 3.98% YoY.
Analysts have downgraded the stock and lowered price targets, citing concerns about aftermarket growth deceleration, margin pressure, and valuation.
Technical indicators suggest a bearish trend.
Options data reflects bearish sentiment with high Put-Call ratios.
In Q1 2026, TransDigm reported revenue growth of 13.91% YoY to $2.285 billion. However, net income dropped by 13.06% YoY to $386 million, and EPS declined by 12.99% YoY to $6.63. Gross margin also decreased by 3.98% YoY to 56.72%.
Analysts' ratings are mixed. While some maintain a Buy rating citing strong margins, acquisitions, and long-term growth potential, others have downgraded the stock due to concerns about aftermarket growth deceleration, margin pressure, and valuation. Price targets range from $1,400 to $1,871, with recent downgrades reflecting cautious sentiment.
