Woodward (WWD) Up 2.6% Since Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Woodward, Inc. WWD. Shares have added about 2.6% in that time frame, underperforming the market.
Will the recent positive trend continue leading up to their next earnings release, or is the stock due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Woodward Tops Earnings, Lags Sales Estimates in Q1
Woodward reported first-quarter fiscal 2017 earnings of 73 cents per share, beating the Zacks Consensus Estimate of 50 cents by 46%. Earnings also surged 82.5% from the prior-year figure of 40 cents. This upside was primarily driven by the after-tax special charges totaling 16 cents per share, which were included in the prior-year quarter as well.
Total Revenue
The company’s quarterly net sales of $442.9 million missed the Zacks Consensus Estimate of $453.1 million by 2.3%. Revenues were almost flat compared to the year-ago figure of $445.1 million, mainly on account of flat year-over-year sales witnessed in both the Aerospace and Industrial segments.
Operational Update
Woodward’s total costs and expenses dropped 5.1% year over year to $395.8 million in the reported quarter. Costs declined primarily due to lower cost of goods sold, selling, general, and administrative expenses as well as research and development (R&D) costs.
Quarterly Segmental Performance
Aerospace: Segment revenues were down 0.7% year over year to $267 million, primarily driven by lower commercial aftermarket sales.
Earnings came in at $47 million, up 9.3% on the back of lower R&D expenses.
Industrial: Segment revenues totaled $176 million, almost flat year over year owing to signs of stabilization in after-market sales as well as flat OEM sales.
Nevertheless, earnings tanked 22.2% to $18 million primarily due to unfavorable product mix.
Financial Condition
Woodward’s cash and cash equivalents as of Dec 31, 2016 were $80.9 million, compared with $81.1 million as of Sep 30, 2016.
Long-term debt (excluding current portion) was $569.9 million as of Dec 31, 2016, down from $577.2 million as of Sep 30, 2016.
Free cash inflow was $31.3 million in the fiscal first quarter, compared with 4.2 million in the year-ago quarter.
In the reported quarter, net cash generated from operating activities was $52.4 million, compared with $37.4 million in the prior-year quarter.
Payments for property, plant and equipment were $21.1 million, compared with $33.1 million in the year-ago quarter.
Fiscal 2017 Guidance
Net sales growth projection is maintained in the 4−6% range. The company also continues to expect earnings in the band of $2.95–$3.25 per share.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been three revisions lower for the current quarter. In the past month, the consensus estimate has shifted 5.14% downward due to these changes.
Woodward, Inc. Price and Consensus
Woodward, Inc. Price and Consensus | Woodward, Inc. Quote
VGM Scores
At this time, Woodward's stock has an average Growth Score of 'C', however its Momentum is doing a lot better with an 'A'. However, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregte VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for momentum investors than growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting a inline return from the stock in the next few months.
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Woodward, Inc. (WWD): Free Stock Analysis Report
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