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Woodward (WWD) Down 2.7% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Woodward (WWD - Free Report) . Shares have lost about 2.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Woodward due for a breakout? 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 Q1 Earnings Beat Estimates
Woodward reported adjusted net earnings of $1.45 per share for first-quarter fiscal 2024, which beat the Zacks Consensus Estimate by 31.8%. In the year-ago quarter, WWD reported adjusted net earnings of 49 cents.
Quarterly net sales increased 27% year over year to $787 million. Continued momentum in end market demand and improved operational performance resulted in this uptick. The top line beat the consensus estimate by 6.4%.
Segment Results
Aerospace: Net sales were $461 million, up 16% year over year. The upside can be attributed to higher commercial OEM and commercial aftermarket sales resulting from higher OEM production rates, improving passenger traffic and fleet utilization.
Defense OEM sales also improved due to higher ground vehicles and guided weapons sales. Defense aftermarket sales benefited from supply-chain stabilization and higher output. We predicted the metric to be $456.9 million.
Segmental earnings were $79 million, up from $55 million a year ago. Higher OEM sales and improved aftermarket volume resulted in the uptick.
Industrial: Net sales totaled $326 million, up 46% year over year due to higher demand across all markets, especially on-highway natural gas truck business in China. We expected the metric to be $268.5 million.
Demand for natural gas heavy-duty trucks in China increased due to a number of factors including a stable supply of natural gas, favorable LNG to diesel price spread and carbon reduction efforts across China. Sales for on-highway natural gas trucks in China came in at $75 million in the quarter under review. However, management does not expect higher sales to continue in fiscal second quarter as demand trends indicate return to earlier peak levels of $50 million.
Segmental earnings were $67 million, up from $11 million in the year-earlier quarter mainly due to increased demand for on-highway natural gas trucks in China and operational improvements (like higher output and other efficiency gains).
Other Details
Gross margin was up 560 basis points year over year to 26%.
Total costs and expenses increased to $677 million, up 15.4% year over year. Adjusted EBITDA was $148 million compared with $72 million a year ago.
Cash Flow & Liquidity
As of Dec 31, Woodward had $144.4 million in cash and cash equivalents with $653 million of long-term debt (less the current portion).
For fiscal first quarter, WWD generated $47 million of net cash from operating activities, rising from $5 million in the prior-year quarter.
Adjusted free cash flow was $3 million. It recorded adjusted free cash outflow of $19 million in the prior-year quarter. The uptick was mainly due to increased earnings partly offset by the “above-target payout” for fiscal 2023 annual incentive compensation and higher capital expenditures.
Woodward did not repurchase any shares in the quarter under review. During the fiscal first quarter, the company paid dividends worth $13 million.
Fiscal 2024 Outlook
Net sales are now expected in the $3.15-$3.3 billion band. Earlier, net sales were forecast to be between $3.1 billion and $3.25 billion.
Adjusted free cash flow is projected to be between $300 million and $350 million (previous projection: in the range of $275-$325 million).
Earnings are suggested to be between $5.00 per share and $5.40 per share. Earlier, earnings per share were forecast to be between $4.75 and $5.20.
Aerospace segment revenues are anticipated to increase in the range of 10-14%. Industrial segment revenues are expected to increase in the range of 8-10% compared with previous guided range of 4-6%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 5.78% due to these changes.
VGM Scores
Currently, Woodward has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Woodward has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Woodward belongs to the Zacks Instruments - Control industry. Another stock from the same industry, Badger Meter (BMI - Free Report) , has gained 8% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Badger Meter reported revenues of $182.44 million in the last reported quarter, representing a year-over-year change of +23.8%. EPS of $0.84 for the same period compares with $0.60 a year ago.
For the current quarter, Badger Meter is expected to post earnings of $0.81 per share, indicating a change of +22.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +1.9% over the last 30 days.
Badger Meter has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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Woodward (WWD) Down 2.7% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Woodward (WWD - Free Report) . Shares have lost about 2.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Woodward due for a breakout? 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 Q1 Earnings Beat Estimates
Woodward reported adjusted net earnings of $1.45 per share for first-quarter fiscal 2024, which beat the Zacks Consensus Estimate by 31.8%. In the year-ago quarter, WWD reported adjusted net earnings of 49 cents.
Quarterly net sales increased 27% year over year to $787 million. Continued momentum in end market demand and improved operational performance resulted in this uptick. The top line beat the consensus estimate by 6.4%.
Segment Results
Aerospace: Net sales were $461 million, up 16% year over year. The upside can be attributed to higher commercial OEM and commercial aftermarket sales resulting from higher OEM production rates, improving passenger traffic and fleet utilization.
Defense OEM sales also improved due to higher ground vehicles and guided weapons sales. Defense aftermarket sales benefited from supply-chain stabilization and higher output. We predicted the metric to be $456.9 million.
Segmental earnings were $79 million, up from $55 million a year ago. Higher OEM sales and improved aftermarket volume resulted in the uptick.
Industrial: Net sales totaled $326 million, up 46% year over year due to higher demand across all markets, especially on-highway natural gas truck business in China. We expected the metric to be $268.5 million.
Demand for natural gas heavy-duty trucks in China increased due to a number of factors including a stable supply of natural gas, favorable LNG to diesel price spread and carbon reduction efforts across China. Sales for on-highway natural gas trucks in China came in at $75 million in the quarter under review. However, management does not expect higher sales to continue in fiscal second quarter as demand trends indicate return to earlier peak levels of $50 million.
Segmental earnings were $67 million, up from $11 million in the year-earlier quarter mainly due to increased demand for on-highway natural gas trucks in China and operational improvements (like higher output and other efficiency gains).
Other Details
Gross margin was up 560 basis points year over year to 26%.
Total costs and expenses increased to $677 million, up 15.4% year over year. Adjusted EBITDA was $148 million compared with $72 million a year ago.
Cash Flow & Liquidity
As of Dec 31, Woodward had $144.4 million in cash and cash equivalents with $653 million of long-term debt (less the current portion).
For fiscal first quarter, WWD generated $47 million of net cash from operating activities, rising from $5 million in the prior-year quarter.
Adjusted free cash flow was $3 million. It recorded adjusted free cash outflow of $19 million in the prior-year quarter. The uptick was mainly due to increased earnings partly offset by the “above-target payout” for fiscal 2023 annual incentive compensation and higher capital expenditures.
Woodward did not repurchase any shares in the quarter under review. During the fiscal first quarter, the company paid dividends worth $13 million.
Fiscal 2024 Outlook
Net sales are now expected in the $3.15-$3.3 billion band. Earlier, net sales were forecast to be between $3.1 billion and $3.25 billion.
Adjusted free cash flow is projected to be between $300 million and $350 million (previous projection: in the range of $275-$325 million).
Earnings are suggested to be between $5.00 per share and $5.40 per share. Earlier, earnings per share were forecast to be between $4.75 and $5.20.
Aerospace segment revenues are anticipated to increase in the range of 10-14%. Industrial segment revenues are expected to increase in the range of 8-10% compared with previous guided range of 4-6%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 5.78% due to these changes.
VGM Scores
Currently, Woodward has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Woodward has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Woodward belongs to the Zacks Instruments - Control industry. Another stock from the same industry, Badger Meter (BMI - Free Report) , has gained 8% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Badger Meter reported revenues of $182.44 million in the last reported quarter, representing a year-over-year change of +23.8%. EPS of $0.84 for the same period compares with $0.60 a year ago.
For the current quarter, Badger Meter is expected to post earnings of $0.81 per share, indicating a change of +22.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +1.9% over the last 30 days.
Badger Meter has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.