Woodward (WWD) Gains From Momentum Across Business Segments
Woodward, Inc’s WWD sales performance is benefiting from strengthening momentum across both the business segments — Aerospace and Industrial.
Revenues from Woodward’s Aerospace business are expected to improve in the upcoming quarters driven by strength in commercial markets as well as higher defense activity.
In the fourth quarter of fiscal 2023, net sales were $455 million, up 11% year over year. The upside can be attributed to higher commercial OEM and commercial aftermarket sales resulting from improving passenger traffic and fleet utilization. For fiscal 2024, management expects Aerospace sales growth to be between 10% and 14%.
The Industrial segment is benefiting from robust demand for power generation, especially in Asia, and increasing requirement for backup power for data centers. In the last reported quarter, segmental net sales totaled $322 million, up 39% from the prior-year quarter due to higher volumes across all markets.
Higher investment in LNG infrastructure development and increasing demand for alternative fuels across the marine industry are positives. The Industrial segment is also likely to be aided by strengthening global marine market brought on by higher utilization and rising shipbuilding rates. For fiscal 2024, management expects Industrial segment’s sales growth to be between 4% and 6%.
However, softness in defense OEM sales due to lower guided weapons sales is a major concern. Global macroeconomic weakness, low visibility into the China on-highway natural gas truck market, forex volatility and rising costs are other headwinds. Inflationary pressure and higher annual incentive compensation are weighing down WWD’s bottom-line performance.
A Look at Estimates
Revenues for fiscal 2024 and 2025 are forecast to rise 14.9% and 5.7% to $3.19 billion and $3.37 billion, respectively.
Woodward’s earnings per share (EPS) are expected to climb 16.7% and 15.1% on a year-over-year basis to $4.92 and $5.66 in fiscal 2024 and 2025, respectively. The Zacks Consensus Estimate for fiscal 2024 and 2025 EPS has improved by 7.2% and 15%, respectively, in the past 60 days.
WWD’s long-term earnings growth rate is pegged at 15.3%.
The company’s PE ratio is pegged at 27.08 below the industry’s ratio of 32.90.
Zacks Rank & Share Price Movement
Currently, Woodward carries a Zacks Rank #2 (Buy).
Apart from a favorable rank, WWD has a VGM Score of B. Per Zacks proprietary methodology, stocks with a combination of a Zacks Rank #1 (Strong Buy) or 2 and a VGM Score of A or B offer solid investment opportunities.
Woodward’s shares have rallied 30.4% in the past year compared with 18.5% and 21.9% growth of the sub-industry and S&P Composite, respectively.
Moreover, it is trading 5.4% below its 52-week high price of $140.73, reflecting upside potential.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other top-ranked stocks worth consideration in the broader technology space are Microsoft MSFT, NETGEAR NTGR and Blackbaud BLKB. While NETGEAR currently sports a Zacks Rank #1, Microsoft and Blackbaud carry a Zacks Rank of 2 each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Microsoft’s fiscal 2024 EPS has improved by 0.3% in the past 60 days to $11.14. MFST’s long-term earnings growth rate is 15.4%.
Microsoft’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 7.8%. Shares of MSFT have surged 61.9% in the past year.
The Zacks Consensus Estimate for 2023 is pegged at a loss of 9 cents per share for NETGEAR, which remained unchanged in the past 30 days. NTGR’s earnings outpaced the Zacks Consensus Estimate in three of the last four quarters while missing once. The average surprise was 127.5%. Shares of NTGR were down 27.2% in the past year.
The Zacks Consensus Estimate for Blackbaud’s 2023 EPS has improved by 1% in the past 60 days to $3.86.
BLKB’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 10.6%. Shares of BLKB have jumped 33.7% in the past year.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
NETGEAR, Inc. (NTGR) : Free Stock Analysis Report
Blackbaud, Inc. (BLKB) : Free Stock Analysis Report
Woodward, Inc. (WWD) : Free Stock Analysis Report
