TransDigm Group is a developer and manufacturer of military and commercial aerospace components. It is a Fortune 1000 company. The company faces a difficult time in the near-term as 70% of its business is from commercial customers. However, 30% comes from the defense segment which is recession-proof. Additionally, 55% of the company’s revenues are from aftermarket sales, a segment that is a stable income generator. So, when the economy returns to normalcy, TransDigm has a business model that is diversified and poised for long-term growth.
A Bit About TransDigm Group
TransDigm Group was founded in the year 1993 as TD Holding Corporation. The founders of the company were W. Nicholas Howley and Douglas Peacock who partnered with private equity firm Kelso & Company. The company acquired four other businesses in leveraged buyout transactions and then renamed itself as TransDigm Inc. Today, TransDigm Group is based out of Cleveland, Ohio. It has more than 14,000 employees and achieved revenues of $5.1 billion in 2020.
TransDigm’s stock closed at $612 on 11th January 2021. The stock is up about 2.9% over the preceding 30 days. On a 1-year basis, TransDigm is flat and is up only about 1.5%. However, TransDigm has gained close to 150% since the March 2020 market crash. On a longer-term basis, TransDigm has gained 180% over a 5-year period.
Another defense major, General Dynamics, is down 1% on a 1-month basis with its stock closing at $151 on 11th January 2021. Its stock has gained a relatively modest 40% since the March market fall. The longer-term 5-year performance isn’t that great either, with the stock up only 20%.
A much smaller peer of TransDigm is Heico Corporation. Its stock closed at $137 on 11th January, up 4% for the past month. The stock has doubled since the March market fall and is up a staggering 400% in the last 5 years.