TransDigm Group Incorporated (NYSE: TDG) stock rose Tuesday after the aerospace supplier reported better-than-expected fiscal fourth-quarter 2026 results. The company reported adjusted earnings of $12.44 per share, beating the analyst estimate of $12.21.

Revenue jumped 23% year over year to $2.99 billion, topping the Wall Street estimate of $2.95 billion. GAAP earnings rose to $10.33 per share from $7.75 a year earlier.

TransDigm Profit Margins Face Pressure

Organic sales grew 14%. However, net income fell 4% to $586 million as higher interest and tax expenses weighed on profits. Adjusted net income increased 12% to $706 million.

Gross profit reached $1.76 billion, while gross margin narrowed to 59% from 60.3%. Adjusted EBITDA, measured as EBITDA As Defined, rose 20% to $1.58 billion. However, the margin fell to 53% from 54.2%. Recent acquisitions reduced the margin by about two percentage points.

Commercial Aerospace Demand Drives Growth

Commercial aftermarket revenue rose 17% on a pro forma basis, while commercial original equipment manufacturer (OEM) revenue increased 15%. Defense revenue grew 12%.

Commercial transport OEM revenue surged 25%, while aftermarket revenue climbed 16%. Business jet and helicopter aftermarket revenue increased 21%, while OEM revenue remained flat.

TransDigm Deploys More Than $7 Billion

TransDigm generated $2.19 billion in operating cash flow during fiscal 2026. It ended September with $2.28 billion in cash.

The company deployed more than $7 billion through acquisitions and share buybacks, including $4.4 billion in acquisitions and $2.8 billion in repurchases. Fourth-quarter buybacks totaled $943 million. TransDigm also completed its approximately $1.07 billion acquisition of Prince & Izant during the quarter.

Fiscal 2027 Earnings Forecast Falls Short

TransDigm forecasts fiscal 2027 adjusted earnings of $47.09 to $47.94 per share, below the analyst estimate of $48.80. The outlook also signals continued pressure on profit margins. TransDigm expects its adjusted EBITDA margin to narrow to about 52% in fiscal 2027 from 52.7% in fiscal 2026.

The company expects GAAP earnings of $42.06 to $42.91 per share, also below the Wall Street estimate of $44.52. However, its revenue forecast of $11.95 billion to $12.15 billion exceeds the $11.80 billion estimate.

At the midpoint, TransDigm expects revenue to grow 14% and adjusted earnings per share to rise 15%.

TDG Price Action: TransDigm Group shares were up 1.53% at $1237.52 at the time of publication on Tuesday, according to market data.