Using an unlevered Free Cash Flow to Firm (FCFF) model, we project TransDigm Group Incorporated's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 13.3% to 7.9% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 65, DPO 39, DIO 208). At a 8.2% WACC with mid-year discounting, the terminal value (83% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 19.9x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $1287.12 per share, suggesting TDG is fairly valued by 11.4% at the current price of $1155.07.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 2,580 | 2,786 | 2,984 | 3,134 | 3,382 | 3,466 |
| (−) Net Interest | 1,921 | 2,075 | 2,223 | 2,334 | 2,519 | 2,582 |
| (+) D&A | 150 | 173 | 197 | 221 | 242 | 248 |
| EBITDA | 4,651 | 5,034 | 5,404 | 5,690 | 6,142 | 6,296 |
| (−) Tax | 495 | 534 | 572 | 601 | 649 | — |
| (−) CapEx | 222 | 240 | 257 | 270 | 291 | — |
| (−) ΔWC | 414 | 301 | 289 | 219 | 360 | — |
| Free Cash Flow (FCF) | 3,520 | 3,960 | 4,287 | 4,600 | 4,843 | — |
| Peers' EBITDA Multiple | 19.9x | |||||
| Terminal Value | 125,478 | |||||
| WACC / Discount Rate | 8.15% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 3,385 | 3,521 | 3,524 | 3,497 | 3,403 | 84,794 |
| Enterprise Value | 102,123 | |||||
| Projection Period | 17,329 | 17.0% | ||||
| Terminal Value | 84,794 | 83.0% | ||||
| (−) Current Net Debt | 27,222 | |||||
| Equity Value | 74,901 | |||||
| (÷) Outstanding Shares | 58M | |||||
| Fair Price | $1287 | +11.4% | ||||
| WACC \ EV/EBITDA Exit Multiple | 15.9x | 17.9x | 19.9x | 21.9x | 23.9x |
|---|---|---|---|---|---|
| 6.2% | $1123 | $1283 | $1444 | $1604 | $1765 |
| 7.2% | $1057 | $1210 | $1363 | $1517 | $1670 |
| 8.2% | $995 | $1141 | $1287 | $1433 | $1580 |
| 9.2% | $936 | $1075 | $1215 | $1354 | $1494 |
| 10.2% | $880 | $1013 | $1146 | $1280 | $1413 |
Current price: $1155.07. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.