Organic Sales Growth Drives Top-Line Expansion
Organic sales increased 12.6% year-over-year, driven by higher commercial aftermarket and OEM demand, while acquisitions contributed an additional 9.8% to net sales.
Source: 10-Q Item 2 MD&A
Computed from published fixed rules, not a model's judgement — though one input, the count of high-severity risks, comes from the AI analysis below.
Not investment advice and not a price target: it scores the quarter's fundamentals, not the stock. Full methodology →
AI Takeaway
TDG's Q3 FY2026 results reflected robust underlying demand in commercial aerospace, with organic sales climbing 12.6% on strength in aftermarket and OEM production. The newly acquired businesses contributed another 9.8% to top-line growth, though they also pressured margins and drove higher interest costs from additional debt. Management emphasized that demand trends remain healthy despite geopolitical uncertainties, and the company's deep aftermarket content continues to support strong cash generation, funding further acquisitions and significant share repurchases.
Revenue
$2.74B
+22.53% YoY
EPS (Diluted)
$9.39
+10.86% YoY
Gross Margin
59.4%
-0.1 pts YoY
Operating Income
$1.23B
+18.09% YoY
Source: SEC XBRL
TransDigm Group (TDG) reported Q3 FY2026 revenue of $2.74B, up 22.5% year over year. Operating margin was 44.8%, down 1.6 points from 46.4% a year earlier. TDG's fiscal Q3 FY2026 corresponds to calendar Q2 2026.
Last 4 quarters: 4 beats
| Quarter | Actual EPS (USD) | Consensus (USD) | Result |
|---|---|---|---|
| Jun 2026This filing | 10.87 | 10.40 | Beat +4.5% |
| Mar 2026 | 9.85 | 9.53 | Beat +3.4% |
| Dec 2025 | 8.23 | 8.18 | Beat +0.6% |
| Sep 2025 | 10.82 | 10.14 | Beat +6.7% |
Adjusted (non-GAAP) EPS of $10.87 versus the $10.40 analyst consensus — a +4.5% beat for Jun 2026. Analyst consensus is quoted on the adjusted (non-GAAP) basis the street uses. GAAP diluted EPS for this quarter was $9.39.
3 reported segments · SEC XBRL
Segment revenue totals $2.74B, which is the $2.74B of consolidated revenue on the income statement.
Compiled by AI from 10-Q Item 2 of this filing
Organic sales increased 12.6% year-over-year, driven by higher commercial aftermarket and OEM demand, while acquisitions contributed an additional 9.8% to net sales.
Source: 10-Q Item 2 MD&A
Gross margin modestly contracted by 0.1 percentage points to 59.4%, as recently acquired businesses carried lower initial profitability; excluding these, cost management and favorable mix improved margins.
Source: 10-Q Item 2 MD&A
Interest expense rose $117 million, or 29.5%, reflecting the additional debt issued to finance the JPE and VSA acquisitions, with the weighted average interest rate remaining at 6.2%.
Source: 10-Q Item 2 MD&A
The company repurchased $1.8 billion of common stock during the period while maintaining $3.6 billion in cash liquidity, including $2.8 billion in cash and full availability on its revolver.
Source: 10-Q Item 2 MD&A
TDG closed the Simmonds and JPE/VSA acquisitions and announced the pending $1.1 billion Prince & Izant deal, though it withdrew from the Stellant acquisition; debt issuance funded these moves.
Source: 10-Q Item 2 MD&A
Compiled by AI from this SEC filing · 1 high, 3 medium, 1 low
As of June 27, 2026, total debt stood at $33.5 billion against a stockholders' deficit of $9.8 billion, resulting in a debt-to-equity ratio of -3.72. The interest coverage ratio of 2.3x indicates that a significant portion of operating income is consumed by interest payments, leaving little cushion for downturns.
Source: 10-Q Balance Sheet (XBRL); 10-Q Income Statement (XBRL)
The company repurchased $1.8 billion in stock during the nine months, exceeding net income of $1.5 billion, which further deepened the stockholders' deficit. This practice, while enhancing per-share metrics, erodes the equity base and increases financial risk.
Source: 10-Q Cash Flow Statement (XBRL)
Revenue is concentrated in aerospace, with Power & Control and Airframe segments comprising over 98% of sales. The company's growth is sensitive to air travel demand and aircraft production rates; a downturn in these cycles could materially reduce top-line performance.
Source: 10-Q Segment Data (XBRL)
The significant increase in total assets, largely from recent acquisitions, implies a high level of goodwill and intangibles. If acquired businesses underperform or market conditions deteriorate, these assets could be subject to impairment charges.
Source: 10-Q Balance Sheet (XBRL)
Operating margin declined by 1.7 percentage points to 44.8%, driven by rising selling and administrative expenses and acquisition-related costs. Persistent cost pressures or additional low-margin acquisitions could further erode profitability.
Source: 10-Q Income Statement (XBRL)
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue $B | 2.74 $B | 2.24 $B | +22.53% |
Cost of Revenue $B | 1.11 $B | 0.91 $B | +22.98% |
Gross Profit $B | 1.63 $B | 1.33 $B | +22.22% |
Operating Income $B | 1.23 $B | 1.04 $B | +18.09% |
Net Income $M | 539.00 $M | 492.00 $M | +9.55% |
EPS (Basic) $ | 9.39 $ | 8.47 $ | +10.86% |
EPS (Diluted) $ | 9.39 $ | 8.47 $ | +10.86% |
SG&A Expense $M | 332.00 $M | 242.00 $M | +37.19% |
Answers draw on this SEC filing and the data on this page
Expected release date, analyst estimates & what to watch
TDG reported strong revenue growth of 18.3% in Q2 FY2026, driven by increased sales and improved operational efficiency, despite a significant rise in long-term debt.
TDG reported Q1 FY2026 revenue of $2.285B (+13.9% YoY) driven by strong top-line growth, but net income fell 9.7% to $445M as higher costs, elevated SG&A, and surging long-term debt to $29.3B weighed on profitability and deepened negative stockholders' equity to -$9.27B.
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