TransDigm Group Incorporated (TDG) Stock Valuation — DCF Analysis
Aerospace & Defense · NYSE
Current Price
$1256.05
Intrinsic Value
$1,323.88
+5.1% margin of safety
COMPETITIVE MOAT
↑Proprietary Aftermarket Parts
TransDigm holds exclusive aftermarket supply agreements for many aircraft parts. This creates a captive customer base for its high-margin components.
↑Acquisition Expertise
The company has a proven track record of acquiring and integrating niche aerospace businesses. This strategy consistently adds revenue and profitability.
↑High Switching Costs
Aviation regulations and safety certifications make it difficult and costly for airlines to switch suppliers for critical components. This locks in demand.
INVESTMENT RISKS
↓Regulatory Scrutiny
The company's pricing strategies for aftermarket parts have drawn regulatory attention. Potential investigations or price caps could impact profitability.
↓Debt Burden
TransDigm's aggressive acquisition strategy has resulted in significant debt. Rising interest rates could increase financial strain and limit future M&A.
↓Customer Concentration
A significant portion of revenue comes from a limited number of large aerospace customers. Any disruption to these relationships could be detrimental.
Base case
TDG base case valuation
A base case discounted cash flow model for TDG estimates an intrinsic value of about $1,323.88 per share, against a current price of $1,256.05. The model assumes 13.2% annual free cash flow growth, a 10.0% discount rate, and a 30x exit multiple.
Intrinsic Value
$1,323.88
Margin of safety
+5.1%
Expected annual return
+1.1%
Base case assumptions: 13.2% annual growth, 10.0% discount rate, 30x exit multiple, 5 year projection. Data as of 2026-06-12.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the TDG valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for TransDigm Group Incorporated respond.
Open DCF Calculator for TDGCompany Overview
TransDigm Group Incorporated is a global aerospace enterprise specializing in the development, manufacturing, and distribution of a wide array of aircraft components. Operating across the United States and internationally, its business is structured around three distinct divisions. The Power & Control division focuses on critical systems, providing solutions such as electromechanical actuators and control mechanisms, engine ignition and related technologies, precision pumps and valves, power regulation equipment, specialized electric motors and generators, energy storage units, data communication and power management systems, diverse sensors, switching gear, and material handling equipment including hoists and cargo systems. This segment caters to a broad clientele, including engine and power system manufacturers, airlines, independent maintenance providers, governmental defense agencies, and aircraft repair facilities. The Airframe segment delivers structural and interior components. Its offerings encompass custom latching and locking mechanisms, structural rods and connectors, resilient sealing solutions, cockpit safety and display units, advanced audio, radio, and antenna technologies, restroom facilities, passenger safety restraints, bespoke interior panels and associated parts, thermal management and insulation products, illumination and control systems, and parachutes. Its customer base includes airframe constructors, cabin system integrators, commercial airlines, third-party maintenance organizations, military procurement offices, and overhaul centers. Beyond aviation, the Non-Aviation segment addresses diverse industrial needs. It supplies safety harnesses for ground vehicles, electromechanical actuators for space vehicles, hydraulic and electromechanical actuators and fuel valves for terrestrial gas turbines, specialized refueling systems for heavy machinery in sectors like mining and construction, and sophisticated turbine controls for the energy and petrochemical industries. This segment's clients span suppliers of off-road vehicles and their subsystems, manufacturers of child safety seats, providers of satellite and space systems, and producers of heavy industrial equipment. Established in 1993, TransDigm Group Incorporated maintains its headquarters in Cleveland, Ohio.
Financial Metrics — TDG Stock Valuation Data
Revenue/Share (TTM)
$163.28
FCF/Share (TTM)
$31.79
ROIC (TTM)
14.5%
ROE (TTM)
-24.3%
P/FCF
38.0x
EV/EBITDA
20.6x
FCF Yield
2.63%
Debt/Equity
n/m
Based on trailing twelve-month data, TDG shows a free cash flow per share of $31.79 and a ROIC of 14.5%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 38.0x and FCF yield of 2.63% are important context metrics when evaluating TDG's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of TDG?
TransDigm Group Incorporated currently generates $31.79 in free cash flow per share. At the current price of $1256.05, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is TDG undervalued?
TDG trades at a P/FCF ratio of 38.0x with a free cash flow yield of 2.63%. This P/FCF is in a moderate range. However, whether TDG is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value TDG stock using DCF?
To perform a DCF valuation on TransDigm Group Incorporated: (1) Start with the trailing free cash flow per share ($31.79) as the base, (2) project future FCF growth over 5-10 years based on Aerospace & Defense industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting TDG's risk profile — with a debt-to-equity of -3.40x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to TDG?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For TransDigm Group Incorporated, this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Aerospace & Defense trends, then discounting those amounts to today's dollars. TDG's ROIC of 14.5% shows moderate capital returns.
How does WACC affect TDG stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For TDG, with a debt-to-equity ratio of -3.40x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 20.6x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See TDG PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Industrials valuationsDCF and P/E value TDG with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-06-12. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.