It has been about a month since the last earnings report for Woodward (WWD Quick QuoteWWD - Free Report) . Shares have added about 14.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Woodward 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 catalysts.

Woodward Q2 Earnings & Revenues Top Estimates

Woodward reported adjusted net earnings per share (EPS) of $1.62 for second-quarter fiscal 2024, which beat the Zacks Consensus Estimate by 26.6%. In the year-ago quarter, WWD reported adjusted net EPS of $1.01.

Quarterly net sales increased 16% year over year to $835 million. Continued momentum in end-market demand and improved operational performance resulted in this uptick. The top line beat the consensus estimate by 4.1%.

The company has increased its 2024 guidance owing to expected improved operational performance in the second half of fiscal 2024 coupled with visibility into the fiscal third-quarter demand for the China on-highway natural gas truck business.

Net sales are now expected to be in the $3.25-$3.35 billion band compared with the previous guidance of $3.15-$3.3 billion.

Adjusted free cash flow is projected to be between $325 million and $375 million (previous projection: in the range of $300-$350 million).

EPS is expected to be between $5.70 and $6.00. Earlier, EPS was forecasted in the range of $5.00-$5.40.

Aerospace segment revenues are anticipated to increase in the range of 12 compared with the previous guided range of 10. Industrial segment revenues are expected to increase in the range of 13 compared with the prior guided range of 8.

Segment Results

Aerospace: Net sales were $498 million, up 14% 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. Defense aftermarket sales benefited from supply-chain stabilization and higher output.
Segmental earnings were $98 million, up from $73 million a year ago. Higher volume and net price realization resulted in an uptick.  

Industrial: Net sales totaled $338 million, up 20% year over year due to growth in transportation, especially in the on-highway natural gas truck business in China, coupled with solid sales in power generation and price realization. Also, solid demand for alternative fuels across the marine industry is a tailwind.

Demand for natural gas heavy-duty trucks in China was solid. Sales for on-highway natural gas trucks in China were $65 million in the quarter under review. However, management expects sales in the fiscal third quarter to be between $35 million to $40 million.

Segmental earnings were $65 million, up from $38 million in the year-ago quarter. This was 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 600 basis points year over year to 22.1%.

Total costs and expenses increased to $714.7 million, up 5.4% year over year.

Adjusted EBITDA was $117 million compared with $164 million a year ago.

Cash Flow & Liquidity

As of Mar 31, 2024, Woodward had $316.9 million in cash and cash equivalents with $649 million of long-term debt (less the current portion).

For the first half of fiscal 2024, WWD generated $144 million of net cash from operating activities, increasing from $40 million in the prior-year period.

Adjusted free cash flow was $90 million. It recorded an adjusted free cash outflow of $1 million in the prior-year quarter. The uptick was mainly due to increased earnings partly offset by higher capital expenditures.

Woodward did not repurchase any shares in the quarter under review. During the first half of fiscal 2024, the company paid dividends worth $28 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

The consensus estimate has shifted 16.32% due to these changes.

VGM Scores

At this time, Woodward has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. 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 F. 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 Quick QuoteBMI - Free Report) , has gained 7.2% over the past month. More than a month has passed since the company reported results for the quarter ended March 2024.

Badger Meter reported revenues of $196.28 million in the last reported quarter, representing a year-over-year change of +23.4%. EPS of $0.99 for the same period compares with $0.66 a year ago.

Badger Meter is expected to post earnings of $0.98 per share for the current quarter, representing a year-over-year change of +29%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.

Badger Meter has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.