Let's go back in a time machine to the early 2006. You just read this in an equity research report about TransDigm, a company that has recently gone public. (TransDigm manufacturers aerospace components and subsystems and has grown revenue and EBITDA more than 20% in recent years through a combination of internal growth and acquisitions.

Valuation: Shares at the Upper End of the Range, and Should Stay There TransDigm shares currently trade at $25.45, or 20.7x our calendar year 2006 EPS estimate of $1.23, which is at middle to upper end of the valuation range for the commercial aerospace universe. Given the company's sizable growth potential, we anticipate that the company's premium valuation will continue in the future. Our $29 price target is based on the belief that the shares can trade at 20.3x our calendar year 2007 EPS estimate of $1.43 within the next 12 months. Figure 12: Valuation Comparables :($ in billions, except per share amounts) TDG BA COL GR AVL* BEAV* High BLOW YOUR Median Stock Price as of 04/21/06 $86.46 $58.86 $45.26 $37.63 $27.07 Dividend Yield 1.4% 0.8% 1.8% 0.0% 0.0% 2006E P/E 24.0x 21.4x 19.2x 19.4x 23.5x TEV/EBITDAP 10. 1x 11.6x 8.2x 9.3x 13.9x Free Cash Flow/Market Cap. 6.6% 4.8% 3.6% Free Cash Flow/Net Income 157% 102% 70% 2007E P/E 19.2x 18.6x 15.9x 17.2x 21.3x TEV/EBITDAP 8.2x 10.1x 7.2x 8.7x 10.6x Free Cash Flow/Market Cap. 8.4% 4.4% 4.9% Free Cash Flow/Net Income 160% 82% 77% "Estimates represent consensus estimates All estimates are calendar year estimates Source: Lehman Brothers estimates, Thomsonone Analytics and company reports