TDG - Why Shares of TransDigm Gained 17% in May
Shares of TransDigm Group (NYSE: TDG) jumped 17% in May, according to data provided by S&P Global Market Intelligence, as investors gained confidence the commercial aerospace component manufacturer can weather a COVID-19 related downturn.
Airlines have dramatically reduced their operations as a result of the pandemic, meaning fewer planes and less demand for spare parts. Given that commercial aerospace makes up about 65% of total TransDigm revenue, we knew the company would be affected, but after an initial panic earlier in the year that saw the shares lose more than half their value, the market is now warming to the stock again.
As expected, TransDigm withdrew fiscal 2020 guidance early in the month, but the company did report better-than-expected earnings. Importantly, management did a good job articulating their plan to get through the crisis, and to grow once it is over.