Source: TransDigm Group.

Manufacturing company TransDigm Group (NYSE:TDG) is not a household name among most investors, as the parts maker's products don't tend to stand on their own. But with its focus on the booming aerospace industry, TransDigm has taken advantage of the massive advances made by aircraft manufacturers Airbus and Boeing in capturing strong demand for newer and more efficient aircraft. Between making new parts to supply original manufacturers and providing aftermarket components for maintenance and repair efforts, TransDigm plays an important role in keeping the aerospace industry functioning smoothly. With TransDigm due to report its fiscal first-quarter results on Tuesday morning, investors will want to see whether the stock can continue the impressive run seen over the past six months. Let's look at what we're likely to see from TransDigm Group in its report and what news the company has had recently.

Stats on TransDigm Group

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$597.23 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Could a slowdown in TransDigm earnings growth be coming?
Investors have cut back their expectations from TransDigm Group earnings recently, reducing their views on both last quarter and the current quarter by about 3%. Yet even with projections for the full 2015 and 2016 fiscal years falling somewhat, the stock has continued to post solid gains, rising 17% since late October.

TransDigm Group's most recent report for its fiscal fourth quarter showed just how strongly the company has performed lately. Revenue soared 19% to $642 million, and adjusted net income rose by an even more impressive 25%. For the full 2014 fiscal year, a 23% sales gain came not only from acquisitions but also from organic growth of about 8%, and adjusted earnings growth of 16% looked equally strong. Yet even at the time, TransDigm predicted that growth in fiscal 2015 would slow considerably, with sales gains falling to the 6% to 7% range and earnings guidance coming in below what investors had expected.

Source: TransDigm Group.

To accelerate potential growth, TransDigm continued to look toward possible strategic acquisitions in recent months. Earlier this month, reports surfaced that the company was considering a takeover of air-cargo handling company Telair, which is a division of aviation specialist AAR. The price for the unit could come in anywhere from $700 million to $1 billion, and TransDigm could face competition from rival bidders including Honeywell and private equity firms Cinven and EQT. With bids requested by early February, TransDigm investors should soon know whether they'll have another piece to add to their puzzle.

The question facing TransDigm in the long run is whether its debt management strategy is sustainable if interest rates rise. TransDigm has taken advantage of low rates to help finance its acquisitions, building up a substantial debt position on its balance sheet. As long as the company can rein in that debt when rates become less favorable, then investors should not have long-term concerns. If it becomes harder than anticipated to manage what it owes, though, higher interest expense could weigh on overall profit growth. Still, the company has done a good job of structuring its debt to give it the time needed as changing credit-market conditions warrant.

In the TransDigm Group earnings report, look for signs of what CEO Nick Howley and his team expect to do to keep pushing forward with the company's overall growth strategy. As long as good opportunities exist in the aerospace industry, TransDigm remains poised to take advantage of its leadership role as a key supplier. Any slowdown in growth could well prove to be temporary -- and a good buying opportunity for those investors seeking to buy into the company.