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ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. TransDigm Group's annualized return on invested capital (ROIC %) for the quarter that ended in Mar. 2026 was 18.40%.
As of today (2026-08-01), TransDigm Group's WACC % is 8.16%. TransDigm Group's ROIC % is 18.24% (calculated using TTM income statement data).
TransDigm Group generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.
There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.
Why is ROIC % important?
Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.
As of today, TransDigm Group's WACC % is 8.16%. TransDigm Group's ROIC % is 18.24% (calculated using TTM income statement data).
TransDigm Group generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
Be Aware
Like ROE % and ROA %, ROIC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
TransDigm Group ROIC % Related Terms
TransDigm Group ROIC % Historical Data
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The historical data trend for TransDigm Group's ROIC % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
For the Aerospace & Defense subindustry, TransDigm Group's ROIC %, along with its competitors' market caps and ROIC % data, can be viewed below:
* 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. Note that "N/A" values will not show up in the chart.
TransDigm Group ROIC % vs Aerospace & Defense Industry
For the Aerospace & Defense industry and Industrials sector, TransDigm Group's ROIC % distribution charts can be found below:
* The bar in red indicates where TransDigm Group's ROIC % falls into.
Note:
The Operating Income data used here is four times the quarterly (Mar. 2026) data.
The tax rate is limited to between 0% and 100%.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
TransDigm Group (LTS:0REK) has a ROIC % of 18.40% as of Mar. 2026. Return on invested capital is the ratio of current-period net income to average two-period invested capital. View historical data on TransDigm Group and its competitors.
Is TransDigm Group's ROIC % too high?
TransDigm Group's current ROIC % is 18.40%. The Aerospace & Defense industry median ROIC % is 4.18. TransDigm Group's value of 18.40% is 340.7% above this industry median. Overall, TransDigm Group has a GF Score™ of 86/100 and is considered Modestly Undervalued, reflecting its overall financial health beyond just this single metric.
How does TransDigm Group's ROIC % compare to HONA and NOC?
TransDigm Group's ROIC % of 18.40% can be compared against companies in the Aerospace & Defense industry. The industry median ROIC % is 4.18. TransDigm Group's value of 18.40% is 340.7% above this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good ROIC % for an Aerospace & Defense company?
The median ROIC % among Aerospace & Defense companies is 4.18, based on 356 companies in the industry. Companies in the top quartile (top 25%) have a ROIC % significantly above this median, while those in the bottom quartile fall well below. However, ROIC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. TransDigm Group's current ROIC % of 18.40% is 340.7% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high ROIC % mean?
A high ROIC % can signal that a stock is expensive relative to its fundamentals. Return on invested capital is the ratio of current-period net income to average two-period invested capital. View historical data on TransDigm Group and its competitors. For the Aerospace & Defense industry, the median ROIC % is 4.18 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. TransDigm Group's current ROIC % is 18.40%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is TransDigm Group stock overvalued right now?
Based on GuruFocus' analysis, TransDigm Group (LTS:0REK) is currently considered Modestly Undervalued. The stock's GF Value™ is $1,620.59, compared to a current price of $1,261.88 — trading 22.1% below its estimated fair value. The current ROIC % is 18.40% and 340.7% above the Aerospace & Defense industry median of 4.18. TransDigm Group's overall GF Score™ is 86/100 with 5 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is ROIC % calculated?
ROIC % is calculated from a company's financial statements. For TransDigm Group (LTS:0REK), the current ROIC % is 18.40% as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is TransDigm Group (LTS:0REK) Overvalued in 2026?
Based on GuruFocus' analysis, TransDigm Group stock appears to be undervalued.
The current stock price of $1,261.88 is trading 22.1% below its estimated GF Value™ of $1,620.59.
GuruFocus considers TransDigm Group to be Modestly Undervalued.
Key valuation signals for LTS:0REK:
ROIC %: 18.40%
GF Value™: $1,620.59 vs. price of $1,261.88 (22.1% below fair value)
Industry Position: 340.7% above the Aerospace & Defense median
No single metric tells the full story. See the LTS:0REK stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
TransDigm manufactures and services a broad set of specialized parts for commercial and military aircraft. The firm organizes itself in three segments: power and control, airframes, and a small non-aviation segment, which serves mostly off-road vehicles and mining equipment. It operates as an acquisitive holding company that focuses on buying up smaller firms that make proprietary aerospace products with substantial aftermarket demand. TransDigm regularly employs financial leverage to amplify its operating results.
86GF Score
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