As of December 15, 2025, TransDigm Group Inc's estimated intrinsic value ranges from $107.53 to $1267.81 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $1267.81 | -2.1% |
| Discounted Cash Flow (5Y) | $1027.56 | -20.6% |
| Dividend Discount Model (Multi-Stage) | $1101.27 | -14.9% |
| Dividend Discount Model (Stable) | $499.58 | -61.4% |
| Earnings Power Value | $107.53 | -91.7% |
Is TransDigm Group Inc (TDG) undervalued or overvalued?
With the current market price at $1294.65, the stock appears to be significantly overvalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate TransDigm Group Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.22 | 1.46 |
| Cost of equity | 9.5% | 13.0% |
| Cost of debt | 5.7% | 7.0% |
| Tax rate | 22.0% | 22.8% |
| Debt/Equity ratio | 0.41 | 0.41 |
| After-tax WACC | 8.0% | 10.8% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $1,028 | $85,079M | 77.4% |
| 10-Year Growth | $1,268 | $98,610M | 61.7% |
| 5-Year EBITDA | $1,364 | $104,049M | 81.5% |
| 10-Year EBITDA | $1,590 | $116,730M | 67.7% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $3,060M |
| Discount Rate (WACC) | 10.8% - 8.0% |
| Enterprise Value | $28,327M - $38,199M |
| Net Debt | $27,207M |
| Equity Value | $1,120M - $10,992M |
| Outstanding Shares | 56M |
| Fair Value | $20 - $195 |
| Selected Fair Value | $107.53 |
| Metric | Value |
|---|---|
| Market Capitalization | $72915M |
| Enterprise Value | $100122M |
| Trailing P/E | 35.16 |
| Forward P/E | 30.02 |
| Trailing EV/EBITDA | 19.45 |
| Current Dividend Yield | 1320.58% |
| Dividend Growth Rate (5Y) | 238.89% |
| Debt-to-Equity Ratio | 0.41 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $380.34 |
| Discounted Cash Flow (5Y) | 25% | $256.89 |
| Dividend Discount Model (Multi-Stage) | 20% | $220.25 |
| Dividend Discount Model (Stable) | 15% | $74.94 |
| Earnings Power Value | 10% | $10.75 |
| Weighted Average | 100% | $943.18 |
Based on our comprehensive valuation analysis, TransDigm Group Inc's intrinsic value is $943.18, which is approximately 27.1% below the current market price of $1294.65.
Key investment considerations:
Given these factors, we believe TransDigm Group Inc is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.