TransDigm Group Incorporated (TDG)
Quantitative Summary
DeterministicTDG trades at 39.2x earnings, roughly in line with its sector average of 44.7x. Financial health is average: Piotroski 6/9, Altman Z 1.9. DCF fair value of $860 implies 30% downside based on model assumptions.
Generated deterministically from quant metrics and financial statements. Not a recommendation.
Algorithmic Teardown
AI-GeneratedThe fundamental economics reveal a distinct tension between robust operational efficiency and deteriorating capital structure metrics. While the company generates substantial free cash flow supported by an ROIC-WACC spread of +7.4% and exceptional net margins of 23.5%, the DuPont decomposition exposes significant leverage issues, with an equity multiplier of -2.37x driving a negative reported ROE of -21.4%. This accounting anomaly is contextualized by strong profitability signals: a Beneish M-Score of -2.32 suggests low earnings manipulation risk, and a Piotroski F-Score of 6/9 indicates solid financial strength despite the leverage distortion. Revenue growth remains healthy at 11.2% annually, yet the Altman Z-Score of 1.9 flags elevated bankruptcy risk due to the aggressive use of debt financing relative to equity.
Valuation metrics suggest the market is pricing in significantly higher long-term growth than current discounted cash flow models support. The stock trades at a premium P/E of 37.6x, exceeding the sector average of 32.1x, while the DCF model implies an upside of -23.4% relative to a fair value of $887. This discrepancy aligns with an implied ten-year free cash flow growth rate of 17.0%, which appears aggressive given that profitability factor alpha is currently weak at -0.194. The negative Fama-French alpha of -11.33% further indicates the stock has underperformed relative to its risk factors over time, suggesting investors may be paying for growth expectations that have not yet materialized or are priced in too optimistically.
Risk assessment highlights a concerning divergence between institutional ownership and insider sentiment. While profitability metrics remain technically strong on an operational basis, the recent 90-day net insider selling of approximately $178 million signals potential caution from management regarding future prospects or valuation levels. Combined with the weak profitability factor alpha and negative DCF upside, these data points construct a risk profile where the high multiple is not fully justified by current fundamental performance or downside protection metrics derived from standard financial scoring models.
Generated by LLM from quantitative data inputs. May contain inaccuracies. Not investment advice.
DCF Sandbox
Interactive5-year two-stage DCF. Terminal growth 3%. Default sliders match the pre-computed base case. Drag to explore scenarios. Not investment advice.
The growth rate the market implicitly expects over the next 10 years to justify today's price. Compare with historical growth of 11% YoY revenue.
Sensitivity Matrix
| TG ↓ / WACC → | 6.7% | 8.7% | 10.7% |
|---|---|---|---|
| 2% | $1210 | $694 | $416 |
| 3% | $1604 | $860 | $505 |
| 4% | $2290 | $1098 | $619 |
Center = base case. Green = >10% upside, Red = >10% downside vs $1246.98.
Pre-computed DCF: WACC=8.7%, terminal growth 3%. Fair value $860 (-30.2%). Not investment advice.
Valuation Context
Currently trading 5% above its 5-year average P/E of 37.1x.
Price Chart with Moving Averages
Technical Setup
AI GeneratedTDG is trading below both its 50-day and 200-day moving averages, indicating that it has been under pressure recently. The RSI reading of 34.2 suggests the stock may be approaching oversold territory, which could imply a potential rebound in momentum if positive factors emerge.
Quant Health Deep Dive
Profitability & Value Creation
⚠️ Dividend consumes >80% of FCF — sustainability risk.
DuPont Analysis — ROE Decomposition
Breaking down Return on Equity to see how the company generates its ROE — efficiency, margins, or leverage.
Balance Sheet Health
Insider Activity (Last 90 Days)
Open-market buys vs sells by company insiders. Source: yfinance.
Earnings Surprise History
EPS estimates vs actuals for the most recent reported quarters. Source: yfinance.
Dividend History
| Date | Amount | Change |
|---|---|---|
| 2025-09-02 | $90.0000 | +20.0% |
| 2024-10-04 | $75.0000 | +114.3% |
| 2023-11-17 | $35.0000 | +89.2% |
| 2022-08-18 | $18.5000 | -43.1% |
| 2019-12-27 | $32.5000 | +8.3% |
| 2019-08-15 | $30.0000 | +36.4% |
| 2017-08-31 | $22.0000 | -8.3% |
| 2016-10-20 | $24.0000 | -4.0% |
| 2014-06-12 | $25.0000 | +13.6% |
| 2013-07-11 | $22.0000 | +71.2% |
| 2012-10-23 | $12.8500 | +68.0% |
| 2009-10-14 | $7.6500 | — |
Dividend and split data from SEC filings and market data. Amounts are per share, not adjusted for splits. Source: yfinance.
Risk Profile
Sharpe = risk-adjusted return (higher is better). Max drawdown = largest peak-to-trough decline. 1,200+ trading days.
Underwater (Drawdown from Peak)
How far below the all-time high the price has been over time. Deeper = more pain for holders.
Rolling 60-Day Beta vs S&P 500 (VOO)
How the stock's sensitivity to market moves changes over time. β > 1 = more volatile than the market.
Fama-French 5-Factor Exposure
Academic factor model decomposition — what's really driving this stock's returns.
Fama-French 5-Factor Model. Data: Kenneth French Data Library. Regression over 3 years of daily returns.
Fundamentals
Passive Flow Attribution
ETF Draft EffectWhen investors buy or sell ETFs like ITA or XAR, the fund manager is mechanically forced to buy or sell TDG shares regardless of TransDigm Group Incorporated's individual fundamentals. We estimate $9.9B of passive capital is structurally linked to TDG through 8 tracked ETFs. This substantial passive exposure means that ETF inflows and outflows — not company fundamentals — can dominate daily volume on this stock.
Passive exposure = Σ (ETF AUM × stock weight in ETF) across 8 tracked ETFs. Actual passive ownership is larger (includes mutual funds). Not investment advice.
ETF Contagion Visualizer
Simulate a price drop in TransDigm Group Incorporated to visualize passive redemption contagion across ETFs and collateral stocks.
If TransDigm Group Incorporated (TDG) experiences a significant drawdown, ETF redemptions can create collateral selling pressure on co-held stocks. Our model identifies GE Aerospace (GE) as the most exposed collateral stock, sharing 1 ETFs with TDG. This is the "Passive Contagion" effect described in the Inelastic Market Hypothesis.
Contagion model based on shared ETF exposure and constituent weights across 29 tracked ETFs. Estimated selling pressure is a simplified model — actual impact depends on market liquidity, ETF redemption mechanics, and market-maker activity.
TDG Ownership Dynamics
Passive funds hold 1 in every 7 TDG shares, reducing daily market volatility.
TransDigm Group Incorporated (TDG) exerts measurable gravity on the passive index market, currently representing 4.5% of the ITA (ITA) and 3.0% of the XAR (XAR). Across 28 tracked ETFs, approximately 8M shares (14.9% of float) are held by passive funds and rarely trade on the open market. This level of passive ownership means index rebalances can create outsized volume events.
ETFs with Highest TDG Exposure
Float lock-up computed from 28 ETFs tracked by SecuritiesDB. Actual passive ownership is higher (includes mutual funds, pension funds, etc.).
TDG Institutional Volume Profile
252-day volume distribution by price level. The Point of Control (POC) marks — the price where the most institutional volume transacted — an implicit support/resistance floor.
The highest-volume price zone for TransDigm Group Incorporated over the past year sits near $1291.81 (15% of 252-day volume). The current price of $1246.98 sits 3.5% below the POC — suggesting potential mean-reversion upside if institutional demand reasserts at this level. The highly concentrated volume profile (15% at POC) indicates strong consensus on fair value — institutional participants have repeatedly transacted near this price.
Volume Profile computed from 252 trading days of OHLCV data. Volume allocated to price bins proportionally based on daily high-low range. Not investment advice.
TDG Capital Efficiency
How efficiently does TransDigm Group Incorporated convert operating profits into free cash? The FCF Conversion ratio measures the gap between accounting earnings and real cash generation.
TransDigm Group Incorporated converts 40% of its EBITDA into free cash flow, a moderate conversion rate — significant EBITDA is consumed by capital expenditures, working capital changes, or interest payments. The 60% reinvestment rate signals aggressive capacity expansion. The positive ROIC-WACC spread of 7.3% confirms that reinvested capital creates shareholder value.
Capital efficiency = Free Cash Flow ÷ EBITDA. Reinvestment = (EBITDA − FCF) ÷ EBITDA. Metrics from latest annual filings. Not investment advice.
Fails-to-Deliver (FTD) History
SEC-reported settlement failures. Elevated FTDs can indicate high short-selling pressure, operational settlement issues, or naked shorting activity.
| Date | Failed Shares | Close Price | Notional Value |
|---|---|---|---|
| 2026-05-08 | 342 | $1241.98 | $424,757.16 |
| 2026-05-07 | 248 | $1233.37 | $305,875.76 |
| 2026-05-06 | 403 | $1191.33 | $480,105.99 |
| 2026-05-05 | 1,177 | $1149.72 | $1.4M |
| 2026-05-04 | 4,355 | $1154.45 | $5.0M |
| 2026-04-22 | 9,392 | $1205.67 | $11.3M |
| 2026-04-21 | 9,567 | $1274.62 | $12.2M |
| 2026-04-15 | 3 | $1296.58 | $3,889.74 |
| 2026-04-02 | 4,387 | $1173.27 | $5.1M |
| 2026-03-31 | 31 | $1132.88 | $35,119.28 |
| 2026-03-26 | 332 | $1156.49 | $383,954.68 |
| 2026-03-25 | 549 | $1162.78 | $638,366.22 |
| 2026-03-24 | 538 | $1152.97 | $620,297.86 |
| 2026-03-23 | 551 | $1177.39 | $648,741.89 |
| 2026-03-19 | 9,940 | $1199.94 | $11.9M |
| 2026-03-13 | 990 | $1225.95 | $1.2M |
| 2026-03-12 | 2,137 | $1258.34 | $2.7M |
| 2026-03-09 | 41 | $1294.53 | $53,075.73 |
| 2026-03-03 | 3,559 | $1316.26 | $4.7M |
| 2026-02-26 | 2,009 | $1295.12 | $2.6M |
| 2026-02-19 | 427 | $1315.33 | $561,645.91 |
| 2026-02-05 | 57 | $1264.79 | $72,093.03 |
| 2026-02-03 | 32,609 | $1435.52 | $46.8M |
| 2026-01-30 | 1,033 | $1422.00 | $1.5M |
| 2026-01-21 | 8,930 | $1448.55 | $12.9M |
| 2026-01-06 | 4,836 | $1367.89 | $6.6M |
| 2025-12-22 | 22 | $1276.83 | $28,090.26 |
| 2025-12-17 | 200 | $1270.57 | $254,114 |
| 2025-12-16 | 2 | $1292.08 | $2,584.16 |
| 2025-12-15 | 1,066 | $1294.65 | $1.4M |
Source: SEC Regulation SHO FTD data. Data is reported with a ~30 day delay. High FTD quantities relative to average daily volume may indicate settlement stress.
Price Correlations
Statistical correlation of daily returns with other stocks. High correlations indicate stocks that move together; negative correlations can offer diversification.
| Peer | 252-Day (1Y) | 126-Day (6M) | Direction |
|---|---|---|---|
| WTGXX | NaN | NaN | |
| HEI | 0.448 | 0.350 | Moderate |
| VRTX | 0.434 | 0.122 | Moderate |
| FIS | 0.396 | 0.378 | Moderate |
| SARO | 0.370 | 0.352 | Moderate |
| NDAQ | 0.370 | 0.461 | Moderate |
| ZTS | 0.366 | 0.314 | Moderate |
| KKR | 0.356 | 0.388 | Moderate |
| MCO | 0.353 | 0.386 | Moderate |
| ACN | 0.351 | 0.363 | Moderate |
Pearson correlation of daily log returns. 252d ≈ 1 trading year. Computed from price history. Not investment advice.
Compare TDG to Peers
Quant metrics computed deterministically from financial statements and price data. Updated: 2026-06-02.
SecuritiesDB provides programmatic data aggregation for informational purposes only. None of the metrics, summaries, or algorithmic flags constitute a recommendation to buy or sell any security.