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Woodward (WWD) Up 9.5% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Woodward (WWD - Free Report) . Shares have added about 9.5% 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 its most recent earnings report in order to get a better handle on the important drivers.
Woodward Q3 Earnings Beat Estimates
Woodward reported third-quarter fiscal 2024 adjusted net earnings per share (EPS) of $1.63, which beat the Zacks Consensus Estimate by 10.9%. In the year-ago quarter, it reported adjusted net EPS of $1.37.
Quarterly net sales increased 6% year over year to $848 million. Continued momentum in end-market demand and strong aerospace aftermarket sales resulted in this uptick. The top line missed the consensus estimate by 0.4%.
Segment Results
Aerospace: Net sales were $518 million, up 8% year over year. Defense OEM sales were down 4% and defense aftermarket was up 22%. Commercial OEM sales were up 2% and commercial aftermarket sales increased 19%. Overall, aftermarket sales were supported by higher aircraft utilization. We predicted the metric to be $515.7 million.
Segmental earnings were $102 million, up from $83 million a year ago. The increase in segment earnings was a result of price utilization in higher aftermarket volumes.
Industrial: Net sales totaled $330 million, up 3% year over year. The rise in industrial sales was primarily driven by an 8% increase in power generation and a 3% jump in transportation.
Industrial segment sales growth moderated year over year as expected due to relatively flat China on-highway sales. We expected the metric to be $320.2 million.
Sales for on-highway natural gas trucks in China were $55 million in the quarter under review. However, management expects further decline in the fiscal fourth quarter, with sales in the range of $10 million to $15 million.
Segmental earnings were $60 million, up from $58 million in the year-ago quarter. Industrial earnings remained relatively flat as price realization was largely offset by inflation and an unfavorable mix.
Other Details
Gross margin was up 160 basis points year over year to 27.1%. Total costs and expenses were $725.6 million, up 4.4% year over year. Adjusted EBITDA was $161 million compared with $147 million a year ago.
Cash Flow & Liquidity
As of Jun 30, 2024, Woodward had $308.3 million in cash and cash equivalents with $562.6 million of long-term debt (less the current portion).
For the nine months ended Jun 30, 2024, the company generated $297 million of net cash from operating activities, increasing from $156 million in the prior-year period.
Adjusted free cash flow was $230 million compared with $103 million in the prior-year period.
The increase in adjusted free cash flow was primarily due to increased earnings and improved working capital, partially offset by higher capital expenditures.
During the first nine months of fiscal 2024, the company returned $348 million to shareholders in the form of $43 million of dividends and $305 million of share repurchases.
Guidance
The company has revised its fiscal 2024 guidance due to lower China on-highway deliveries and supply chain disruptions, including delayed supplier deliveries and customer pushouts. These issues are expected to delay cash collection on planned deliveries beyond the fiscal 2024 end.
Net sales are expected to be in the $3.25-$3.3 billion band compared with the previous guidance of $3.25-$3.35 billion.
Adjusted free cash flow is projected to be between $300 million and $350 million (previous projection: $325-$375 million).EPS is expected to be between $5.80 and $6.00. Earlier, EPS was forecasted in the range of $5.70-$6.00.
Aerospace segment revenues are anticipated to increase in the range of 12-14%, unchanged from the previous guidance. Industrial segment revenues are expected to increase in the band of 11-13% compared with the prior guided range of 13-15%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -9.65% due to these changes.
VGM Scores
Currently, Woodward has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Woodward has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Woodward (WWD) Up 9.5% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Woodward (WWD - Free Report) . Shares have added about 9.5% 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 its most recent earnings report in order to get a better handle on the important drivers.
Woodward Q3 Earnings Beat Estimates
Woodward reported third-quarter fiscal 2024 adjusted net earnings per share (EPS) of $1.63, which beat the Zacks Consensus Estimate by 10.9%. In the year-ago quarter, it reported adjusted net EPS of $1.37.
Quarterly net sales increased 6% year over year to $848 million. Continued momentum in end-market demand and strong aerospace aftermarket sales resulted in this uptick. The top line missed the consensus estimate by 0.4%.
Segment Results
Aerospace: Net sales were $518 million, up 8% year over year. Defense OEM sales were down 4% and defense aftermarket was up 22%. Commercial OEM sales were up 2% and commercial aftermarket sales increased 19%. Overall, aftermarket sales were supported by higher aircraft utilization. We predicted the metric to be $515.7 million.
Segmental earnings were $102 million, up from $83 million a year ago. The increase in segment earnings was a result of price utilization in higher aftermarket volumes.
Industrial: Net sales totaled $330 million, up 3% year over year. The rise in industrial sales was primarily driven by an 8% increase in power generation and a 3% jump in transportation.
Industrial segment sales growth moderated year over year as expected due to relatively flat China on-highway sales. We expected the metric to be $320.2 million.
Sales for on-highway natural gas trucks in China were $55 million in the quarter under review. However, management expects further decline in the fiscal fourth quarter, with sales in the range of $10 million to $15 million.
Segmental earnings were $60 million, up from $58 million in the year-ago quarter. Industrial earnings remained relatively flat as price realization was largely offset by inflation and an unfavorable mix.
Other Details
Gross margin was up 160 basis points year over year to 27.1%.
Total costs and expenses were $725.6 million, up 4.4% year over year. Adjusted EBITDA was $161 million compared with $147 million a year ago.
Cash Flow & Liquidity
As of Jun 30, 2024, Woodward had $308.3 million in cash and cash equivalents with $562.6 million of long-term debt (less the current portion).
For the nine months ended Jun 30, 2024, the company generated $297 million of net cash from operating activities, increasing from $156 million in the prior-year period.
Adjusted free cash flow was $230 million compared with $103 million in the prior-year period.
The increase in adjusted free cash flow was primarily due to increased earnings and improved working capital, partially offset by higher capital expenditures.
During the first nine months of fiscal 2024, the company returned $348 million to shareholders in the form of $43 million of dividends and $305 million of share repurchases.
Guidance
The company has revised its fiscal 2024 guidance due to lower China on-highway deliveries and supply chain disruptions, including delayed supplier deliveries and customer pushouts. These issues are expected to delay cash collection on planned deliveries beyond the fiscal 2024 end.
Net sales are expected to be in the $3.25-$3.3 billion band compared with the previous guidance of $3.25-$3.35 billion.
Adjusted free cash flow is projected to be between $300 million and $350 million (previous projection: $325-$375 million).EPS is expected to be between $5.80 and $6.00. Earlier, EPS was forecasted in the range of $5.70-$6.00.
Aerospace segment revenues are anticipated to increase in the range of 12-14%, unchanged from the previous guidance. Industrial segment revenues are expected to increase in the band of 11-13% compared with the prior guided range of 13-15%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -9.65% due to these changes.
VGM Scores
Currently, Woodward has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Woodward has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.