A month has gone by since the last earnings report for Transdigm Group Incorporated TDG. Shares have added about 10.3% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

TransDigm Beats on Q2 Earnings, FY17 View Positive

TransDigm reported its fourth successive earnings beat, as second-quarter fiscal 2017 adjusted earnings came in at $2.88 per share (including stock-based compensation adjustments), comfortably beating the Zacks Consensus Estimate of $2.85.

The figure fared even better in year-over-year comparison, rising 5.9% from the year-ago quarter’s adjusted figure of $2.72.

The bottom-line growth came on the back of robust top-line performance and improvements in operating margin. Also, consistent efforts to boost productivity, favorable product mix and lower acquisition-related costs proved conducive to the earnings growth.

Inside the Headlines

Net sales for the quarter came in at $873.2 million, representing an impressive year-over-year growth of 9.6%. However, the top line lagged the Zacks Consensus Estimate of $886 million.

Decent growth in Defense (up 3% year over year) and Commercial OEM (up 2%) revenues supplemented the top-line performance. Furthermore, contributions from the previously completed acquisitions and favorable product mix supported the sales performance.

Majority of the company’s commercial aftermarket businesses saw year-over-year revenue growth. Overall, the soft commercial aftermarket revenue growth was mostly offset by stronger defense revenues. Further, year-to-date commercial aftermarket bookings for the company are running ahead of shipments, which bodes well for the company’s performance in the upcoming quarters.

TransDigm’s EBITDA (earnings before interest, taxes, depreciation and amortization) grew 16.5% year over year to $397.7 million.

Acquisitions

In February, TransDigmannounced the acquisition of SCHROTH Safety Products GmbH, and aviation & defense assets and liabilities of Takata Corporation, for a total of $90 million in cash. The acquired units will operate as a single business – SCHROTH – and will focus on designing and manufacturing proprietary, highly engineered, advanced safety systems for aviation, racing, and military ground vehicles.

SCHROTH Safety Products comprises the lion’s share of revenues (about 90%) in this deal. In this transaction, most of the revenues will come from proprietary products, with aftermarket content accounting for approximately 40% of the revenues, and aerospace & defense representing 80% of the revenues. This move reflects TransDigm’s strategy to acquire proprietary aerospace businesses with significant aftermarket content, in a bid to fortify its core business. Given that SCHROTH has a growing aftermarket presence on attractive high-use platforms, TransDigm believes that it will contribute significantly toward its core business.

Liquidity

TransDigm ended the quarter with cash and cash equivalents of $985.4 million, down from $1587.0 million as of Sep 30, 2016. At the end of the reported quarter, the company’s long-term debt was $10.8 billion compared with $9.9 billion at the end of Sep 2016.

During the quarter, TransDigm repurchased 1,517,824 shares of its common stock at an aggregate cost of approximately $340 million under the existing stock repurchase program. Also, in March the company authorized a new $600 million stock repurchase program to replace the existing one. As on Apr 1, the amount left over for repurchase under the new program were roughly $410 million.

Fiscal 2017 Guidance

The company updated its fiscal 2017 guidance to reflect its recent acquisition of Schroth, and higher interest expense. Now, TransDigm projects net sales to be in the range of $3,530–$3,570 million compared with the earlier guided range of $3,520–$3,570 million. Similarly, adjusted earnings are forecast to lie within the range of $12.09–$12.33 per share compared with the earlier guidance of $12.02–$12.30 per share.

Additionally, TransDigm Group projected net income to lie in the band of $605–$619 million and EBITDA to be in the range of $1,693–$1,713 million. The earlier guided range of net income and EBITDA were $609–$625 million and $1, 686–$1,710 million, respectively.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.

Transdigm Group Incorporated Price and Consensus

Transdigm Group Incorporated Price and Consensus | Transdigm Group Incorporated Quote

VGM Scores

At this time, the stock has a subpar Growth Score of 'D', a grade with the same score on the momentum front. Following the exact same course, the stock was allocated also a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate investors will probably be better served looking elsewhere.

Outlook

The stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.

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