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TDG, TransDigm

Aerospace & Defense capital-intensive Serial acquirer

TransDigm Inc., is a leading global designer, producer and supplier of highly engineered aircraft components that are critical to the safe and effective operation of nearly all commercial and military aircraft worldwide.

Our products are represented in nearly every commercial and military aircraft in service today.

TransDigm is well diversified due to the broad range of products we offer to our customers.

Latest annual: FY2025 10-K

TDG · TransDigm

The business

What it sells, where the money comes from, the kind of company it is.

Revenue · FY2025

$8.8B

+11.2% YoY · 12% 5-yr CAGR

Vital signs · TTM, with 5-yr average

Revenue $9.5B 5-yr avg $6.7B

Gross margin 60% 5-yr avg 57%

Operating margin 46.5% 5-yr avg 42.4%

ROIC 19% 5-yr avg 17%

Owner-earnings margin 19% 5-yr avg 19%

Free cash flow margin 19% 5-yr avg 19%

The business in brief

read the 10-K →

What this business is and what moves its needle, from its own SEC filings.

Situation: Serial acquirer. Goodwill and acquired intangibles are 61% of assets, with meaningful acquisition spending in 8 of the record's 9 years; much of what this business is was bought, at prices the record carries.
What moves the needle: Gross margin has run about 57% and operating margin about 42% through the cycle, a wide spread between price and the cost of what it sells — whether that advantage is durable pricing power or a margin that can erode is the question the record is for. That margin has stayed fairly steady relative to where it runs (34%–47% over the years), so unit growth and cost discipline, not a moving line, are the lever. Inventory runs near 24% of sales, so how fast it turns back into cash — and the risk of writing it down when demand softens — sits alongside the margin. Read this kind of business on the backlog and program execution. On its own account, the filing leans hardest on customer concentration, set against the numbers in what the filing emphasizes, below.
Is it a good business?: Return on capital has run in the teens (median 14%, above 15% in 4 of 9 years). Owner earnings agree: roughly 20% of revenue reaches owners as cash, consistently. Returns like these are solid but short of clear franchise economics; whether they hold is what the 10-K settles, not the multiple.

Every line is arithmetic on the company's filings, shown in full in the sections below.

Where the money comes from

read the 10-K →

37% of revenue comes from outside the United States.

Revenue by geography, FY2025

United States63%$5.5B
International37%$3.3B

From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.

The record

Ten years of arithmetic, read across the cycle.

The record, 2017–2025

realized figures from each filing · older years to the left

2017’17	2018’18	2019’19	2020’20	2021’21	2022’22	2023’23	2024’24	2025’25	TTMTTMMar 2026
										Income statement
$3.5B	$3.8B	$5.2B	$5.1B	$4.8B	$5.4B	$6.6B	$7.9B	$8.8B	$9.5B	RevenueRevenue
57%	57%	54%	52%	52%	57%	58%	59%	60%	60%	Gross marginGross mgn
12%	12%	14%	14%	14%	14%	12%	12%	11%	11%	SG&A / revenueSG&A/rev
2%	2%	2%	3%	2%	2%	2%	1%	1%	1%	R&D / revenueR&D/rev
$1.5B	$1.7B	$1.9B	$1.8B	$1.7B	$2.2B	$2.9B	$3.5B	$4.2B	$4.4B	Operating incomeOp. inc.
42.3%	43.4%	36.9%	34.3%	35.2%	40.8%	44.4%	44.5%	47.2%	46.5%	Operating marginOp. mgn
$597M	$957M	$890M	$699M	$680M	$866M	$1.3B	$1.7B	$2.1B	$2.1B	Net incomeNet inc.
26%	2%	20%	11%	5%	23%	24%	23%	21%	22%	Effective tax rateTax rate
										Cash flow & returns
$789M	$1.0B	$1.0B	$1.2B	$913M	$948M	$1.4B	$2.0B	$2.0B	$2.1B	Operating cash flowOp. cash
$141M	$129M	$226M	$283M	$253M	$253M	$268M	$312M	$367M	$393M	DepreciationDeprec.
$5M	($123M)	($194M)	$138M	($149M)	($324M)	($326M)	($169M)	($555M)	($502M)	Working capital & otherWC & other
$71M	$73M	$102M	$105M	$105M	$119M	$139M	$165M	$222M	$255M	CapexCapex
2.0%	1.9%	2.0%	2.1%	2.2%	2.2%	2.1%	2.1%	2.5%	2.7%	Capex / revenueCapex/rev
$718M	$949M	$913M	$1.1B	$808M	$829M	$1.2B	$1.9B	$1.8B	$1.9B	Owner earningsOwner earn.
20.5%	24.9%	17.5%	21.7%	16.8%	15.3%	18.8%	23.7%	20.6%	19.5%	Owner earnings marginOE mgn
$718M	$949M	$913M	$1.1B	$808M	$829M	$1.2B	$1.9B	$1.8B	$1.9B	Free cash flowFCF
20.5%	24.9%	17.5%	21.7%	16.8%	15.3%	18.8%	23.7%	20.6%	19.5%	Free cash flow marginFCF mgn
$216M	$668M	$4.0B	$0	$963M	$437M	$762M	$2.3B	$419M	$1.3B	AcquisitionsAcquis.
$2.6B	$56M	$1.7B	$1.9B	$73M	$1.1B	$38M	$2.0B	$159M	$159M	Dividends paidDiv. paid
$390M	$0	$0	$19M	$0	$912M	$0	$0	$500M	—	BuybacksBuybacks
14%	19%	13%	14%	13%	13%	16%	23%	19%	19%	ROICROIC
										Balance sheet
$651M	$2.1B	$1.5B	$4.7B	$4.8B	$3.0B	$3.5B	$6.3B	$2.8B	$3.9B	Cash & investmentsCash+inv
$636M	$704M	$1.1B	$720M	$791M	$967M	$1.2B	$1.4B	$1.6B	$1.7B	ReceivablesReceiv.
$731M	$805M	$1.2B	$1.3B	$1.2B	$1.3B	$1.6B	$1.9B	$2.1B	$2.4B	InventoryInvent.
$149M	$174M	$276M	$218M	$227M	$279M	$305M	$323M	$368M	$425M	Accounts payablePayables
$1.2B	$1.3B	$2.0B	$1.8B	$1.7B	$2.0B	$2.5B	$2.9B	$3.3B	$3.7B	Operating working capitalOper. WC
$2.1B	$3.7B	$4.9B	$7.0B	$7.0B	$5.6B	$6.7B	$10.0B	$7.0B	$8.6B	Current assetsCur. assets
$871M	$900M	$1.5B	$1.6B	$1.7B	$1.4B	$1.6B	$6.3B	$2.2B	$2.4B	Current liabilitiesCur. liab.
2.4×	4.1×	3.2×	4.3×	4.2×	4.0×	4.3×	1.6×	3.2×	3.5×	Current ratioCurr. ratio
$5.7B	$6.2B	$7.8B	$7.9B	$8.6B	$8.6B	$9.0B	$10.4B	$10.6B	$11.0B	GoodwillGoodwill
$10.0B	$12.2B	$16.3B	$18.4B	$19.3B	$18.1B	$20.0B	$25.6B	$22.9B	$25.4B	Total assetsAssets
$11.5B	$12.6B	$16.5B	$19.7B	$19.9B	$19.5B	$19.5B	$24.5B	$29.4B	$31.4B	Total debtDebt
$10.8B	$10.5B	$15.1B	$14.9B	$15.1B	$16.5B	$16.0B	$18.2B	$26.6B	$27.5B	Net debt / (cash)Net debt
($3.0B)	($1.8B)	($2.9B)	($4.0B)	($2.9B)	($3.8B)	($2.0B)	($6.3B)	($9.7B)	($9.4B)	Shareholders’ equityEquity
1.3%	1.5%	1.8%	1.8%	2.7%	2.8%	2.1%	2.4%	1.7%	1.4%	Stock comp / revenueSBC/rev
										Per share
55.5M	55.6M	56.3M	57.3M	58.4M	58.2M	57.2M	57.8M	58.2M	58.2M	Shares out (diluted)Shares
$63.11	$68.54	$92.77	$89.06	$82.16	$93.28	$115.12	$137.37	$151.74	$163.28	Revenue / shareRev/sh
$10.75	$17.21	$15.81	$12.20	$11.64	$14.88	$22.69	$29.65	$35.64	$35.77	EPS (diluted)EPS
$12.92	$17.07	$16.22	$19.34	$13.84	$14.24	$21.61	$32.53	$31.20	$31.79	Owner earnings / shareOE/sh
$12.92	$17.07	$16.22	$19.34	$13.84	$14.24	$21.61	$32.53	$31.20	$31.79	Free cash flow / shareFCF/sh
$46.49	$1.01	$30.41	$33.65	$1.25	$18.75	$0.66	$35.26	$2.73	$2.73	Dividends / shareDiv/sh
$1.28	$1.31	$1.81	$1.83	$1.80	$2.04	$2.43	$2.85	$3.81	$4.38	Cap. spending / shareCapex/sh
$-53.14	$-32.53	$-51.40	$-69.32	$-49.93	$-64.83	$-34.69	$-108.82	$-166.43	$-161.55	Book value / shareBVPS

Per-share growththe realized rate an owner's share compounded

	8-yr	5-yr
Revenue / share	+11.6%/yr	+11.2%/yr
Owner earnings / share	+11.6%/yr	+10.0%/yr
EPS	+16.2%/yr	+23.9%/yr
Dividends / share	−29.8%/yr	−39.5%/yr
Capital spending / share	+14.6%/yr	+15.8%/yr

The record, charted

FY2017–2025

Each measure over its full record; the current point and the worst year marked.

Share count

58Mpeak FY2021

ROIC

19%low FY2019

Gross margin

60%low FY2020

Net debt ÷ owner earnings

14.7×peak FY2022

Owner earnings vs. net income

Owner earningsNet income

The accountant's number, and the cash an owner can take; the gap is the tell.

$1.8Bowner earningsvs.$2.1Bnet incomelow FY2017

Where the cash went

ReinvestBuybacksDividendsAcquisitionsRetainedBeyond op. cash

Each year's outlays against its operating cash: the mix, and how it drifts. The hatched cap is spending beyond that year's operating cash — financed from the balance sheet or borrowing, not operations.

FY2017FY2025

Owner-earnings bridge

FY2021–FY2025cash-flow statement, SEC EDGAR →

Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.

In fiscal 2025 the business reported $2.1B of profit but $1.8B of owner earnings: $258M less than the profit line, taken out by capital spending and the timing of cash.

Reported net income$2.1B

Owner earnings$1.8B · 21% of revenue

	FY2025	FY2024	FY2023	FY2022	FY2021
Reported net income	$2.1B	$1.7B	$1.3B	$866M	$680M
Depreciation & amortizationnon-cash charge added back	+$367M	+$312M	+$268M	+$253M	+$253M
Stock-based compensationreal costnon-cash, but a real cost	+$152M	+$188M	+$135M	+$153M	+$129M
Working capital & othertiming of cash in and out, other non-cash items	−$555M	−$169M	−$326M	−$324M	−$149M
Cash from operations	$2.0B	$2.0B	$1.4B	$948M	$913M
Capital expenditurecash put back in to keep running and to grow	−$222M	−$165M	−$139M	−$119M	−$105M
Owner earnings	$1.8B	$1.9B	$1.2B	$829M	$808M
Owner-earnings marginowner earnings ÷ revenue	21%	24%	19%	15%	17%

Owner earnings is the cash an owner could pull out without starving the business: operating cash less the capital it must spend to hold its position . The cash-flow statement also adds stock comp back as non-cash, but it is a real cost paid in shares; counted as the expense it is (less $152M), owner earnings is nearer $1.7B.

Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.

III

Quality & stewardship

Returns, the balance sheet, capital allocation, and pay.

Owner’s Scorecard

FY2025 10-K · source on SEC EDGAR →

Will it survive?

Can it pay its interest? —

Interest expense not tagged in the data

What this means
No usable interest-expense line was tagged in the filing data, but the balance sheet carries real net debt — so the interest burden here is unknown, not absent. Read the debt on the net-debt check below.
How heavy is the debt, net of cash? $26.6B · 6.4× operating profit

Heavy net debt

Cash $2.8B − debt $29.4B

What this means
Netting $2.8B of cash and short-term investments against $29.4B of debt leaves $26.6B owed, about 6.4× a year's operating profit (7.1× on the gross debt, before the cash). Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
How long is cash tied up? 246d

Long (60+ days)

DSO 67 + DIO 217 − DPO 38 days

What this means
Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.

Is it a good business?

Return on invested capital 14%

Solid through the cycle

9-yr median, range 13%–23%; 19% latest = NOPAT $3.3B ÷ invested capital $16.9B

Industry peers: median 14%

What this means
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 9 years (it ran 19% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
Owner-earnings margin 20%

High through the cycle

9-yr median margin, range 15%–25%; latest $1.8B = operating cash $2.0B − maintenance capex $222M

Industry peers: median 5%

What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 21% of revenue this year, a 20% median across 9 years. Treating stock comp as the real expense it is (less $152M of SBC) leaves $1.7B.
Are earnings backed by cash? 0.98×

Mostly cash-backed

Cash from ops $2.0B ÷ net income $2.1B

What this means
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

Where do the earnings go? 36%

Reinvests most of it

Dividends + buybacks $659M ÷ Owner Earnings $1.8B

What this means
Of $1.8B Owner Earnings, $659M (36%) went back to shareholders, $159M dividends, $500M buybacks. Net of $152M stock comp, the real buyback was about $348M. Returning most of it is the mark of a mature business with little left to reinvest at a high return; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
Investing or harvesting? 0.60×

Harvesting

Capex $222M ÷ depreciation $367M

What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 5 of 6 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

Adequate size Pass

Revenue ≥ $2B · $8.8B

What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
Strong liquidity Pass

Current ratio ≥ 2× · 3.21×

What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
Conservative debt Miss

Debt ≤ working capital · $29.4B vs $4.8B WC

What this means
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
Earnings stability Pass

A profit every year (9-yr record) · no losses

What this means
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
Dividend record Pass

Uninterrupted dividends · paid every year (9)

What this means
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
Earnings growth Pass

Earnings +33% over the record · +108%

What this means
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
Moderate price —

P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price

What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $30.31/share (latest year $37.08), the averaged base the calculator's gate runs on, and book value is $-173.17/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2017–2025

Whether the record’s returns held, and what the capital reinvested earned.

Profitable years 9 of 9

What this means
Never lost money over the record, the earnings stability Graham insisted on.
Return on capital ≥ 15% 4 of 9 yrs

What this means
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
Operating margin 41% → 45% (3-yr avg ends)

What this means
Through the cycle the operating margin widened — about 41% early to 45% lately, median 42% — pricing power intact or improving.
Reinvestment, incremental ROIC 28%

What this means
Every extra dollar the business reinvested came back at a high incremental return — the lens GBM read for a moat that reinvests rather than merely harvests. The record and the 10-K are where you check whether the rate holds.
Owner earnings growth +10%/yr

What this means
Owner earnings grew about 10% a year over the record.
Worst year 2020 · 34.3% op. margin

What this means
Stayed profitable even in its hardest year, the resilience that survives recessions.
Share count +0.6%/yr

What this means
Roughly flat share count, little dilution, little buyback.
Dividend record paid

What this means
Paid a dividend in 9 of the years on record.

Does AI threaten the moat?

Low contestability

The moat is physical, regulated or balance-sheet-funded, the kind AI cuts costs within but does not contest.

AI is unlikely to contest a moat that is physical, regulated or balance-sheet-funded; here it reads more as a cost tool than a threat.

Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.

All figures as filed; the source filing is linked above.

Current Position

as of the latest quarter, Mar 28, 2026

Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.

Current assets$8.6B

Cash & short-term investments$3.9B
Receivables$1.7B
Inventory$2.4B
Other current assets$575M

Current liabilities$2.4B

Debt due within a year$129M
Accounts payable$425M
Other current liabilities$1.9B

Current ratio3.52×all current assets ÷ what's due · Graham looked for 2×

Quick ratio2.53×stricter: inventory excluded

Cash ratio1.59×strictest: cash alone against what's due

Working capital$6.1Bthe cushion left after near-term bills

Debt due this year vs. cash$129M due · $3.9B cash covered by cash on hand, no refinancing forced · both figures from the Mar 28, 2026 balance sheet

Revenue, latest quarter vs. a year ago+18.3%the freshest read on whether the business is still growing

Current ratio, recent quarters3.8× → 3.5×

Deeper floors

Tangible book value($24.3B)equity stripped of goodwill & intangibles

Net current asset value($26.3B)Graham's net-net: current assets less all liabilities

Debt incl. operating leases$31.5B$66M of it operating leases

Deferred revenue$150Mcustomer cash collected before delivery; operating float

From the company's latest filing.

Debt maturity

the debt note, SEC EDGAR →

Not how much it owes, but when it falls due, and against what. The ladder the company files, beside cash on hand and a year's owner earnings.

'26$116M

'27$116M

'28$2.2B

'29$4.8B

'30$3.5B

later$18.5B

Bars scaled to the largest single year; “later” is everything due after 2030, shown apart since it dwarfs the years.

Due in the next 12 months$116Mthe first rung: what must be repaid or rolled over within the year

Within two years$232Mthe near wall, the part most exposed to today’s credit conditions

Biggest single year$4.8Bin 2029the lumpiest maturity, where a refinancing, if needed, is largest

Total scheduled principal$29.2Bevery year plus what lies beyond, as the footnote totals it

Against what the business has and earns

Cash & short-term investments, Mar 28, 2026$3.9B

One year of owner earnings (FY2025)$1.8B

Together, against $116M due next year49.1×

Cash on hand as of Mar 28, 2026 plus a year’s owner earnings comes to $5.7B against the $116M due in the twelve months after the Sep 30, 2025 schedule: 49 times it.

Maturity schedule extracted from the company’s Sep 30, 2025 annual report and reconciled to the total the table states.

How the cash was used, 2017–2025

Over the record, the business generated $11.4B of operating cash; how management split it reads as a cash returner, paying most of what it earns straight back to owners.

Reinvested$1.1B · 10%
Dividends$9.7B · 85%
Buybacks$1.8B · 16%

Returned to owners$11.5B
112% of the owner earnings the business produced over the span, $9.7B as dividends and $1.8B as buybacks.
Source of funding−$1.2B
Reinvestment and shareholder returns ran $1.2B beyond the operating cash the business generated, so the gap was financed off the balance sheet: debt rose from $11.5B to $31.4B.
Average price paid for buybacks$418.81
Across the years where the filing reports a share count, 2M shares were bought for $890M, about $418.81 each.
Net change in share count4.8%
The diluted count rose from 56M to 58M: issuance (stock pay, deals) outran any buybacks, so owners were diluted on net.
Dividend record$2.73/sh
Paid in 9 of the years on record, the per-share dividend shrinking about 30% a year. It was cut at least once along the way.

Buybacks are gross of stock issued to staff; the share-count line above is the net of that, the figure that decides whether owners gained. The average price paid blends a year of purchases (and any accelerated repurchase), so it is close, not exact. The record of where the cash went and on what terms.

Acquisitions & goodwill

from the balance sheet & the 9-year cash-flow record

Goodwill grows only when a company acquires and falls only when it concedes it overpaid. The size of that bet, the cash put into buying rather than building, and how much has already been written off.

Goodwill & intangibles$14.1B61% of all assets; the premium carried on the balance sheet for businesses acquired

Against book equity—goodwill is this share of book equity; the rest is the company’s own retained and paid-in capital

Cash spent acquiring$9.8Bover 9 years buying other businesses, against $1.1B of capital spent building

$32M written down across 1 year (2017): goodwill the company has already conceded it overpaid for, charged against earnings. A write-down costs no cash (the cash went out when the deal was signed), but it is management marking its own past judgment to market.

Goodwill, acquired intangibles and equity from the latest balance sheet; acquisition spend and write-downs summed across the 9-year record, from the company's own filings.

Management, ownership & pay

read the proxy →

From the proxy: how much of the business the people running it own, and how they are paid, beside what the business earned for its owners in the same years.

Fiscal year	Chief executive	Pay, as filed	“Actually paid”	Owner earnings
2021	Kevin M. Stein	$21.5M	$44.5M	$808M
2022	Kevin M. Stein	$18.7M	$2.2M	$829M
2023	Kevin M. Stein	$23.8M	$81.0M	$1.2B
2024	Kevin M. Stein	$21.4M	$173.9M	$1.9B
2025	Kevin M. Stein	$25.2M	$27.1M	$1.8B

Both pay figures are the company’s own, from the pay-versus-performance table its proxy statement files. “As filed” is the Summary Compensation Table total: salary, bonus, and equity awards at their value on the day of grant. “Actually paid” is the SEC’s prescribed recalculation, which re-marks those equity awards to what they became as they vested; it can swing far above or below the filed figure in either direction, and negative years occur. Owner earnings are the whole business's, from the record above, for the same fiscal years.

Insider ownership3.2%
The stake all directors and executive officers hold together, per the 2026 proxy: skin in the game, the first thing Munger reads.
Stock-based compensation$152M
The slice of the business handed to employees in shares this year, 2% of revenue, equal to 4% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.

Inverting the record

Invert: instead of why TransDigm is a good business, the question is what would make owning it a mistake, and whether those marks are in the record. Disconfirming tests across 2017–2025.

2 of the 6 tests turned up something to look into; the other 4 came back clean.

Look hereDid the share count rise anyway?4.8%
Diluted shares grew 4.8% over 2017–2025, even as the company spent $1.8B on buybacks. The repurchases were a treadmill: stock issued to staff outran them, so owners' slice still shrank. Read the buyback line beside this one, not on its own.
Look hereDid debt outgrow the business?$11.5B → $31.4B
Debt rose from $11.5B to $31.4B while owner earnings went from about $860M to $1.6B — about 13 years of owner earnings in debt then, about 19 now: measured against what the business earns, the balance sheet carries more debt than it did. Debt raised for buybacks or deals rather than growth is the kind that bites in a downturn.

And these came back clean

Is it less profitable than it was?
Did reported profit become cash?
Did receivables and inventory outpace sales?
Are "one-time" charges a yearly habit?

Each test is read from the filings and is noisy alone; a flag can mark a cyclical trough or a year of heavy investment as easily as a problem. The filing says which.

What an owner would ask, FY2025

read the 10-K →

How much of the revenue rides on one buyer?
≈$3.8B · 40% of revenue on the largest customers (TTM)
“Our top ten customers for fiscal year 2025 accounted for approximately 40% of our net sales.”verify →
Which reported numbers are a judgment call?
Management names Revenue recognition, Pension & retirement, Income taxes, Acquisitions as critical estimates
each rests partly on management's judgment; the filing's note sets out the assumptionsverify →

The questions the record and the charts do not answer on their own; each carries the figure and the place to look.

Peers, Aerospace & Defense

The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.

Company	Revenue	Gross margin	Op. margin	ROIC	Owner earn. margin
TXTTextron	$14.8B	17%	7.8%	16%	5%
OSKOshkosh	$10.4B	17%	8.1%	14%	5%
THOThor Industries	$9.6B	14%	6.5%	14%	5%
TDGTransDigm	$8.8B	57%	42.3%	14%	20%
DANDana Incorporated Common Stock	$7.5B	9%	2.6%	5%	2%
PIIPolaris Inc.	$7.2B	24%	7.8%	14%	7%
SAROStandardAero Inc.	$6.1B	14%	7.5%	9%	-0%
HEIHeico Corp.	$4.5B	39%	21.1%	14%	18%
Group median	—	17%	7.8%	14%	5%

The price

What a price has to assume.

What the price implies

reverse-DCF

Type today's close and see the owner-earnings growth you'd have to believe to justify it, beside what TransDigm has delivered.

Today’s price $

Through the cycle, TransDigm earns about $1.8B on its 20.5% median owner-earnings margin. This year’s 20.6% margin runs in line with that. Normalize, below, values the price on that through-cycle figure rather than the latest year.

Base Normalize · through-cycle ($1.8B) Net of stock comp (−$132M) Steady-state · maintenance capex ($1.9B)

—

The assumptions Required return 9% Years of high growth 10 Terminal growth 2.5%

9.0% = the 4.55% 10-year Treasury (Jul 15, 2026) + 4.45 points of equity premium. The rate you require is yours to set.

Enter a price above to run it.

Implied by the price—

Owner-earnings growth · ’21→’25+23%/yr

Owner-earnings growth · ’17→’25+10%/yr

Owner-earnings yield—

P/E (3-yr earnings ’23–’25)—

P/B—

Graham’s price gate—

Graham capped the multiple at 15×; Buffett and Munger let that rule go: a wonderful business can deserve 50× if the thesis holds. The gate marks the bargain-hunter's floor.

Against a high-grade bond: Graham’s yardstick bond yield%

Prefilled with the 10-year Treasury (4.55%, as of Jul 15, 2026). Edit it for today’s exact figure, or a AAA corporate yield.

Graham measured a stock against the bond you could own instead, the heart of his margin of safety. Enter a price above to weigh the owner-earnings yield against this bond.

Free cash flow $1.9B on 56M shares outstanding, per the 10-Q cover, as of 2026-04-30; net debt $27.5B. The if-converted diluted count is 58M, 4% above the shares outstanding: the dilution overhang (convertibles, options) a buyer inherits. The base is the latest year by default; Normalize values it on the through-cycle median owner-earnings margin (to avoid paying on a peak year). Net of stock comp treats option pay as the expense it is. Capex ($255M) runs well above depreciation ($393M), so this is a build-out; Steady-state swaps total capex for maintenance (≈ depreciation), lifting the base to about $1.9B, the cash it would throw off if it stopped expanding. The dials set the multiple a growth belief justifies; the price, and every dollar on this page, is yours.

Weigh TDG against another business →

The owners of TDG: the meeting and the votes →

Cite: Owner Scorecard, "TransDigm (TDG), the owner's record," https://ownerscorecard.com/c/TDG, data as of 2026-07-09.

Manual order: ← TDC its page in the Manual TDOC →

Industry order: ← TATT the Aerospace & Defense chapter TDY →