Q1/26 First Look; Margin Recovery Continues

Research evidence excerpt

Q1/26 First Look; Margin Recovery Continues

TD Cowen Magellan Aerospace Corp.

Global Research May 11, 2026

VALUATION METHODOLOGY AND RISKS

Valuation Methodology

Transportation/Aerospace

We use a combination of DCF, EV/EBITDA multiples and P/E multiples applied to our forward

four-quarter (12 months from today) forecasts to value the group. In certain instances, we use a

sum-of-the-parts valuation methodology.

Investment Risks

Economic risk: A deterioration in economic conditions could impact the demand for company

product and services.

Fuel risk: Companies have limited visibility into fuel price changes which could impact margins.

Liquidity: Airline and defence companies are capital intensive. Limitations in a company's

ability to access debt and equity capital could impact their ability to finance growth.

Fare risk: Fares may not rise as fast as expenses putting pressure on margins.

Competition risk: Increased competition could lead to overcapacity and/or aggressive pricing.

Regulation: Industry is heavily regulated. Changes in regulation could impact profitability.

Labour risk: Limitations in attracting employees could impact growth. A unionized workforce is

common within the industry. Strikes and/or contract negotiations could pressure margins.

OEM delays: Production delays with key customers and/or suppliers could impact the

company's ability to deliver its products.

Commodity price risk: Volatility in commodity prices could impact profitability.

Contract risk: Fixed price contracts could be unprofitable in an inflationary environment.

Funding: Delays/reduction in defence spending in North America and Europe could impact

industry demand/sales.

Cost inflation: Material and labour cost inflation could pressure margins.