TransDigm Group, a leading aerospace supplier, reported solid third-quarter 2025 results with revenue rising 9.3% to $2.24 billion and adjusted margins climbing to 54.4%. However, its stock plummeted over 7% as both revenue and adjusted earnings per share ($9.60) fell short of analyst expectations ($2.29 billion and $9.86, respectively). The decline was driven by weak demand in the commercial aviation sector, where production slowdowns and customer inventory reductions hurt performance. Consequently, the company lowered its full-year revenue forecast to $8.76–8.82 billion, below the consensus estimate of $8.87 billion.
High Valuation and Debt Concerns Amplify Selloff
Despite raising its EBITDA guidance to $4.725 billion, TransDigm’s premium valuation (P/E of 49) and heavy debt burden—net debt at 4.9x EBITDA—left little room for disappointment. Rising interest costs, up 25.6% to $397 million, added pressure. While defense sales grew 13% and aftermarket parts revenue increased 6%, investors remained wary, signaling skepticism about near-term growth prospects. The stock’s sharp drop reflects mounting concerns over whether TransDigm can sustain its premium pricing in a tightening financial environment.
