TDG – Market expectations are for declines in Uniform ROA, and management has concerns about growth, the commercial aftermarket, and Esterline

• TransDigm Group Incorporated (TDG:USA) currently trades near historical highs relative to UAFRS-based (Uniform) Earnings, with a 22.3x Uniform P/E. Even at these levels, the market has bearish expectations for the firm, and management has concerns about revenue growth, the strength of the commercial aftermarket segment, and the Esterline integration progress
• Specifically, management may lack confidence in their ability to sustain revenue growth, improve EBITDA margins, and drive intrinsic shareholder value. Moreover, they may be exaggerating older aircraft utilization rates and concerned about the sustainability of revenue passenger mile growth in the commercial aftermarket segment, as well as their ability to maintain shipment volume. Furthermore, they may be concerned about the Esterline integration progress, their ability to justify asset multiples, and their market segmentation.