What Happened?
Shares of aerospace and defense company TransDigm (NYSE: TDG) fell 10.4% in the afternoon session after the company reported mixed fourth quarter earnings with organic revenue falling short of expectations. On the other hand, TransDigm narrowly topped analysts' revenue and EBITDA estimates. Adding to the positive, the company raised its full-year sales and earnings guidance. Overall, this was a decent quarter. The stock's reaction suggests the market was expecting more.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy TransDigm? Access our full analysis report here, it’s free.
What Is The Market Telling Us
TransDigm’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. Moves this big are rare for TransDigm and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock dropped 12.5% on the news that the company reported third-quarter financial results that fell short of analyst expectations for both revenue and earnings. The aircraft components manufacturer posted revenue of $2.24 billion and adjusted earnings per share of $9.60, both of which missed Wall Street estimates. TransDigm explained the shortfall resulted from its commercial Original Equipment Manufacturer (OEM) market, where companies build parts for other manufacturers' final products. The company cited lower-than-expected aircraft production rates and customers who reduced their parts inventories, a practice called destocking. Compounding the issue, TransDigm also trimmed its full-year sales guidance, which signaled potential challenges ahead.
TransDigm is down 4.3% since the beginning of the year, and at $1,301 per share, it is trading 19.7% below its 52-week high of $1,621 from July 2025. Investors who bought $1,000 worth of TransDigm’s shares 5 years ago would now be looking at an investment worth $2,170.
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