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TransDigm Group Piotroski F-Score

: 4 (As of Today)
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The zones of discrimination were as such:

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

TransDigm Group has an F-score of 4 indicating the company's financial situation is typical for a stable company.

NYSE:TDG' s Piotroski F-Score Range Over the Past 10 Years
Min: 3   Med: 6   Max: 8
Current: 4

3
8

During the past 13 years, the highest Piotroski F-Score of TransDigm Group was 8. The lowest was 3. And the median was 6.


TransDigm Group Piotroski F-Score Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

TransDigm Group Annual Data
Sep10 Sep11 Sep12 Sep13 Sep14 Sep15 Sep16 Sep17 Sep18 Sep19
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 8.00 8.00 5.00 7.00 5.00

TransDigm Group Quarterly Data
Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 5.00 5.00 5.00 5.00 4.00

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


TransDigm Group Piotroski F-Score Distribution

* The bar in red indicates where TransDigm Group's Piotroski F-Score falls into.


How is the Piotroski F-Score calculated?

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar20) TTM:Last Year (Mar19) TTM:
Net Income was 144.45 + 346.87 + 304 + 319 = USD 1,114 Mil.
Cash Flow from Operations was 315.356 + 247.116 + 433 + 161 = USD 1,156 Mil.
Revenue was 1658.319 + 1375.644 + 1465 + 1443 = USD 5,942 Mil.
Gross Profit was 761.474 + 824.36 + 801 + 818 = USD 3,205 Mil.
Average Total Assets from the begining of this year (Mar19)
to the end of this year (Mar20) was
(17797.156 + 17702.598 + 16254.731 + 18156 + 16635) / 5 = USD 17309.097 Mil.
Total Assets at the begining of this year (Mar19) was USD 17,797 Mil.
Long-Term Debt & Capital Lease Obligation was USD 17,933 Mil.
Total Current Assets was USD 5,200 Mil.
Total Current Liabilities was USD 1,656 Mil.
Net Income was 217.246 + 228.763 + 196 + 202 = USD 844 Mil.

Revenue was 980.662 + 1049.434 + 993 + 1168 = USD 4,191 Mil.
Gross Profit was 569.52 + 597.266 + 564 + 650 = USD 2,381 Mil.
Average Net Income from the begining of last year (Mar18)
to the end of last year (Mar19) was
(10394.677 + 11804.477 + 12197.467 + 12389.278 + 17797.156) / 5 = USD 12916.611 Mil.
Total Assets at the begining of last year (Mar18) was USD 10,395 Mil.
Long-Term Debt & Capital Lease Obligation was USD 16,509 Mil.
Total Current Assets was USD 5,596 Mil.
Total Current Liabilities was USD 1,726 Mil.

*Note: If the latest quarterly/semi-annual/annual total assets data is 0, then we will use previous quarterly/semi-annual/annual data for all the items in the balance sheet.

Profitability

Question 1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by Total Assets at the beginning of the year.

Score 1 if positive, 0 if negative.

TransDigm Group's current Net Income (TTM) was 1,114. ==> Positive ==> Score 1.

Question 2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by Total Assets at the beginning of the year.

Score 1 if positive, 0 if negative.

TransDigm Group's current Cash Flow from Operations (TTM) was 1,156. ==> Positive ==> Score 1.

Question 3. Change in Return on Assets

Compare this year's return on assets (1) to last year's return on assets.

Score 1 if it's higher, 0 if it's lower.

ROA (This Year)=Net Income/Total Assets (Mar19)
=1114.32/17797.156
=0.06261225

ROA (Last Year)=Net Income/Total Assets (Mar18)
=844.009/10394.677
=0.08119627

TransDigm Group's return on assets of this year was 0.06261225. TransDigm Group's return on assets of last year was 0.08119627. ==> Last year is higher ==> Score 0.

Question 4. Quality of Earnings (Accrual)

Compare Cash flow return on assets (2) to return on assets (1)

Score 1 if CFROA > ROA, 0 if CFROA <= ROA.

TransDigm Group's current Net Income (TTM) was 1,114. TransDigm Group's current Cash Flow from Operations (TTM) was 1,156. ==> 1,156 > 1,114 ==> CFROA > ROA ==> Score 1.

Funding

Question 5. Change in Gearing or Leverage

Compare this year's gearing (long-term debt divided by average total assets) to last year's gearing.

Score 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Mar20)=Long-Term Debt & Capital Lease Obligation/Average Total Assets from Mar19 to Mar20
=17933/17309.097
=1.0360448

Gearing (Last Year: Mar19)=Long-Term Debt & Capital Lease Obligation/Average Total Assets from Mar18 to Mar19
=16509.181/12916.611
=1.27813565

TransDigm Group's gearing of this year was 1.0360448. TransDigm Group's gearing of last year was 1.27813565. ==> This year is lower or equal to last year. ==> Score 1.

Question 6. Change in Working Capital (Liquidity)

Compare this year's current ratio (current assets divided by current liabilities) to last year's current ratio.

Score 1 if this year's current ratio is higher, 0 if it's lower

Current Ratio (This Year: Mar20)=Total Current Assets/Total Current Liabilities
=5200/1656
=3.14009662

Current Ratio (Last Year: Mar19)=Total Current Assets/Total Current Liabilities
=5595.529/1726.193
=3.2415431

TransDigm Group's current ratio of this year was 3.14009662. TransDigm Group's current ratio of last year was 3.2415431. ==> Last year's current ratio is higher ==> Score 0.

Question 7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 0 if there is larger number of shares in issue this year, 1 otherwise.

TransDigm Group's number of shares in issue this year was 57.4. TransDigm Group's number of shares in issue last year was 56.3. ==> There is larger number of shares in issue this year. ==> Score 0.

Efficiency

Question 8. Change in Gross Margin

Compare this year's gross margin (Gross Profit divided by sales) to last year's.

Score 1 if this year's gross margin is higher, 0 if it's lower.

Gross Margin (This Year: TTM)=Gross Profit/Revenue
=3204.834/5941.963
=0.5393561

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=2380.786/4191.096
=0.56805809

TransDigm Group's gross margin of this year was 0.5393561. TransDigm Group's gross margin of last year was 0.56805809. ==> Last year's gross margin is higher ==> Score 0.

Question 9. Change in asset turnover

Compare this year's asset turnover (total sales for the year divided by total assets at the beginning of the year) to last year's asset turnover ratio.

Score 1 if this year's asset turnover ratio is higher, 0 if it's lower

Asset Turnover (This Year)=Revenue/Total Assets at the Beginning of This Year (Mar19)
=5941.963/17797.156
=0.33387149

Asset Turnover (Last Year)=Revenue/Total Assets at the Beginning of Last Year (Mar18)
=4191.096/10394.677
=0.40319637

TransDigm Group's asset turnover of this year was 0.33387149. TransDigm Group's asset turnover of last year was 0.40319637. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=1+1+0+1+1+0+0+0+0
=4

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

TransDigm Group has an F-score of 4 indicating the company's financial situation is typical for a stable company.

TransDigm Group  (NYSE:TDG) Piotroski F-Score Explanation

The developer of the system is Joseph D. Piotroski is relatively unknown accounting professor who shuns publicity and rarely gives interviews.

He graduated from the University of Illinois with a B.S. in accounting in 1989, received an M.B.A. from Indiana University in 1994. Five years later, in 1999, after earning a Ph.D. in accounting from the University of Michigan, he became an associate professor of accounting at the University of Chicago.

In 2000, he wrote a research paper called "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers" (pdf).

He wanted to see if he can develop a system (using a simple nine-point scoring system) that can increase the returns of a strategy of investing in low price to book (referred to in the paper as high book to market) value companies.

What he found was something that exceeded his most optimistic expectations.

Buying only those companies that scored highest (8 or 9) on his nine-point scale, or F-Score as he called it, over the 20 year period from 1976 to 1996 led to an average out-performance over the market of 13.4%.

Even more impressive were the results of a strategy of investing in the highest F-Score companies (8 or 9) and shorting companies with the lowest F-Score (0 or 1).

Over the same period from 1976 to 1996 (20 years) this strategy led to an average yearly return of 23%, substantially outperforming the average S&P 500 index return of 15.83% over the same period.


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