Image source: TransDigm Group.

The aerospace industry has boomed lately, and as a manufacturer of key components for the industry, TransDigm Group (NYSE:TDG) has shared in the same success that major companies like United Technologies (NYSE:UTX) have enjoyed in meeting high demand for their parts. Coming into its fiscal fourth-quarter financial report Thursday, TransDigm investors had extremely high hopes that the company would be able to accelerate its already impressive growth pace, with big gains in revenue coming from its acquisition strategy. Let's take an early look at how TransDigm Group is likely to fare and what lies ahead for the company.

Stats on TransDigm Group

Analyst EPS Estimate

$2.56

Change From Year-Ago EPS

15.8%

Revenue Estimate

$805.42 million

Change From Year-Ago Revenue

25%

Earnings Beats in Past 4 Quarters

2

Data source: Yahoo! Finance.

How will TransDigm earnings fare this quarter?
Investors have remained upbeat on their views on TransDigm Group earnings in recent months, raising fiscal fourth-quarter estimates by $0.02 per share and boosting full-year fiscal 2016 projections by a dime per share. The stock hasn't managed to follow suit, however, falling 5% since early August.

TransDigm's fiscal third-quarter report in August helped set the tone for the quarter. The company continued to post reasonably strong growth, with revenue climbing 13% and helping to send adjusted net income up by 11%. The pace of that growth wasn't quite as fast as investors had wanted to see, but many took solace in the fact that TransDigm boosted its guidance for the remainder of the year. Nevertheless, comments about potential sluggishness in the commercial aerospace sector came as a shock to some shareholders, signaling the possibility of further shortfalls in the future.

In the interim, TransDigm Group has followed through with its acquisition strategy. The company completed its acquisition of PneuDraulics in August, giving TransDigm even more exposure to the commercial aerospace sector in the area of pneumatic and hydraulic components and subsystems for commercial jets and military applications. The deal is expected to help TransDigm cement relationships with major aircraft makers by having it responsible for an even larger portion of the parts and components that go into key new models.

In addition, TransDigm has pursued and achieved valuable supply agreements with major players in the industry. In September, TransDigm's Champion Aerospace unit finalized long-term Life of Program supply agreements with United Technologies' UTC Aerospace Systems, with the agreement providing for key components for a wide variety of different aircraft ignition systems. The relationship between United Technologies and TransDigm is important to both companies, and the confidence in TransDigm's value and quality supports the solid reputation that it has in the industry.

One unknown that could have a big impact on TransDigm's potential is what happens with the defense side of the aerospace industry. For a long time, the bullish argument for TransDigm has hinged on the commercial side of the business, which makes sense given the budget challenges in military spending and the big ramp-up in commercial demand among airlines. Yet if appropriations for military aircraft can regain some of their lost momentum, then TransDigm could suddenly have a much bigger source of growth ahead, reversing some of the negative trends that it has had to overcome in past years.

In the TransDigm Group earnings report, investors need to watch for two things. First, integrating the big acquisitions that the company has made needs to go smoothly in order to justify the money and effort spent on putting the deals together. Equally importantly, TransDigm must continue finding ways to build organic growth in supplying components for aircraft. If it can keep executing well on those fronts, then TransDigm should have the ability to recoup some of the lost ground in its share price.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends TransDigm Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.