TransDigm Group

Methodology

TransDigm's aerospace aftermarket parts generate highly predictable earnings from sole-source positions and aircraft installed base. Proprietary parts pricing power creates exceptional visibility. The calculation works well for this aerospace parts consolidator though high leverage from acquisitions requires debt-adjusted valuation approaches.

Methodology

TransDigm consistently commands premium PEG ratios reflecting aftermarket parts pricing power, sole-source positions, and acquisition-driven growth. While growth appears modest organically, the business model quality justifies valuations. Compare to TransDigm's historical range and evaluate based on EBITDA given significant leverage from serial acquisitions.

Methodology

TransDigm pays no regular dividend, prioritizing debt paydown and acquisitions over shareholder distributions. Without dividends, PEGY equals PEG. For TransDigm, free cash flow generation and acquisition execution matter far more than traditional income metrics given the leveraged serial acquisition strategy.