> TransDigm Group Inc. is a designer and supplier of engineered aircraft components and systems with a high-margin, cash-generative financial profile driven by sustained pricing power and per-share revenue growth.
The company shows several durable strengths: gross margin reached 60.1% in the most recent period and operating margin has been elevated around 46.5% (period end 2024-09-30), underscoring strong profitability and product pricing (Profit Margin Trends).
Per-share top-line expansion is clear — split-adjusted revenue per share rose to $151.22 most recently and 1-year revenue-per-share growth was 11.2% as of 2025-09-30 — while longer-term growth measures include a 5-year revenue-per-share CAGR of 8.74% and a 3-year EPS CAGR of 24.82% (EPS Diluted & Revenue per Share, Revenue & EPS Growth).
Operating cash flow (TTM) has strengthened to $2.04B, with operating cash flow exceeding reported net income on average by a factor of 1.14, supporting earnings convertibility to cash (Earnings Quality Analysis, Strategic Capital Allocation).
Offsetting those positives are notable weaknesses around returns and recent financing activity. Return on equity has been highly volatile and recently deteriorated — the latest observed ROE in the series was -35.1% (period end 2017-12-30) and the ROE growth metric registers -122.47% (actual -1.2247), indicating a reversal from prior very high readings (Return on Equity (ROE)).
Cash-flow allocation shows a large financing outflow of -$4.90B (TTM) most recently, and investing cash flow remains negative at -$595.0M TTM, which together signal substantial capital deployment and swings in financing needs even as operating cash flow has improved (Strategic Capital Allocation).
Key fundamentals to monitor going forward are continued revenue-per-share growth and its translation into diluted EPS, the trend in operating cash flow versus net income and cash conversion ratios, stability of gross and operating margins around 60.1% and mid-40s respectively, any recovery or stabilization in ROE, and the pattern of financing cash flows and net leverage metrics that drive capital structure outcomes (Revenue & Net Income, Price-to-Earnings (PE) Ratio Trend).
The foundation of business quality and long-term value creation
TransDigm Group INC’s revenue displays a long-term upward trajectory from sub-$0.6B quarterly receipts in 2013 to multi‑billion dollar quarters more recently, with several notable larger reported values — $7.94B on 2024-09-30 and $6.59B on 2025-09-30 — and more routine quarterly levels around $2.2–$2.5B in 2025–2026. The most recent revenue point in the dataset is $2.54B for the quarter ended 2026-03-28, reflecting an increase from $2.24B reported for the quarter ended 2025-06-28.
Net income has generally risen over the series, moving from mid‑double‑digit millions in the early 2010s to sustained hundreds of millions in later years. Recent quarters show steady increases: $382.0M (2023-12-30), $461.0M (2024-06-29), $479.0M (2025-03-29) and $492.0M (2025-06-28), indicating a higher absolute profitability level in the most recent observations. The most recent quarterly revenue was $2.54B and the most recent reported net income was $492.0M.
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Over the period Oct 2024 to Sep 2025, Transdigm Group Inc converts approximately 60¢ of every revenue dollar into gross profit (gross margin: 60.1%).The waterfall below shows how revenue flows through various expense categories.
Period Information
Report Type: Annual (10-K)
Period: Oct 2024 to Sep 2025
Analyzing long-term margin stability and competitive positioning
TransDigm Group INC's gross margin in the most recent data points trends slightly upward, rising to 60.1% for the period ending 2025-09-30 from 58.8% a year earlier (2024-09-30).
Operating margin is reported most recently at 46.5% (2024-09-30), remaining at elevated levels compared with earlier observations in the low-to-mid 40% range (41.3% in 2013 and roughly 44–45% in 2017).
Net profit margin in this dataset is last reported in 2017 and shows an increase to 25.8% at 2017-12-30 from 15.7% in 2013.
The most recent gross margin was 60.1% (2025-09-30), the most recent operating margin was 46.5% (2024-09-30), and the most recent net profit margin observed was 25.8% (2017-12-30).
Understanding Profit Margins
Between Oct 2024 and Sep 2025, Transdigm Group Inc converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
TransDigm Group INC’s operating cash flow (TTM) shows a clear multi-year increase in the dataset with several inflection points. Operating CF rises from roughly $496M in early 2016 to $730.6M by year-end 2016, crosses the $1.0B level in 2018–2019, reaches about $1.21B in 2020, dips to $913.0M in the 2021 observation, and then increases to $2.04B in the latest 2025-09-30 data point.
Reported net income (TTM) values in the provided series are available only through 2017 and show growth from $302.8M in 2013 to $911.7M in 2017; no later net income TTM values are included in this dataset, so comparisons with the 2025 operating cash flow are not possible from these records. The most recent Operating Cash Flow (TTM) was $2.04B (period end 2025-09-30). The most recent Net Income (TTM) in the dataset was $911.7M (period end 2017-12-30).
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
Trailing Twelve Months
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
TransDigm Group INC's return on equity has moved sharply negative in the most recent quarters, falling from -20.2% on 2017-09-30 to -35.1% on 2017-12-30. The recent two quarter run shows a deterioration in ROE, reversing away from the large positive readings observed earlier in the series.
Across the full series the metric is highly volatile: ROE reached 90.0% on 2016-09-30 and again on 2013-09-30, while it also hit a trough of -43.1% on 2015-09-30. The latest observed return on equity for TransDigm Group INC was -35.1% (period end 2017-12-30).
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
TransDigm Group INC's trailing-twelve-month operating cash flow has strengthened in the most recent period, rising to $2.04B as of 2025-09-30. Earlier reported figures show operating cash flow at $1.02B (2019), $1.21B (2020) and $913M (2021), indicating a notable increase to the latest level.
Investing cash flow has been consistently negative across the reported periods, moving from a large outflow of -$3.89B in 2019 to more moderate negative values in later years (-$785M in 2021, -$900M in 2023) and -$595.0M most recently.
Financing cash flow has exhibited large swings: positive inflows in some years (e.g., $2.27B in 2019, $1.23B in 2020, $3.17B in 2024) versus a small outflow of -$70M in 2021 and a material outflow of -$4.90B in 2025, representing a clear inflection between 2024 and 2025.
The most recent trailing twelve-month operating cash flow was $2.04B; investing cash flow was -$595.0M; financing cash flow was -$4.90B.
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Trailing Twelve Months
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
TransDigm Group INC's trailing twelve-month P/E moved in the mid-to-high 20s for much of the 2013–2016 period, peaking at 35.1x in the quarter ended 2014-09-30 before declining back toward the high 20s in subsequent years. From 2015 through the quarter ended 2017-09-30 the ratio was relatively stable in the 25–29x range (27.7x, 28.8x, 25.3x).
The most recent quarter shows a pronounced drop: the P/E fell to 17.6x in the period ending 2017-12-30, representing the lowest value in the series. The most recent reported price-to-earnings ratio was 17.6x as of 2017-12-30.
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.