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Curtiss-Wright (CW) Up 5.1% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Curtiss-Wright (CW - Free Report) . Shares have added about 5.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Curtiss-Wright 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.
Curtiss-Wright Beats on Q2 Earnings, Hikes '24 Sales View
Curtiss-Wright reported second-quarter adjusted earnings per share (EPS) of $2.67, which surpassed the Zacks Consensus Estimate of $2.24 by 19.2%. The bottom line also improved 24.2% from the year-ago quarter’s level of $2.15.
The company reported GAAP earnings of $2.58 per share, up 22.9% from the prior-year period’s earnings of $2.10.
The year-over-year upside can be attributed to higher sales and operating income, along with lower interest expenses incurred in the second quarter of 2024 compared to the year-ago quarter.
Operational Performance
In the quarter under review, the company’s net sales of $784.8 million went up 11.4% year over year. Also, the top line surpassed the Zacks Consensus Estimate of $736 million by 6.6%.
The company reported adjusted operating income of $133 million in the second quarter, up 16% year over year. The adjusted operating margin expanded 60 basis points (bps) to 17%. This upside was driven by favorable overhead absorption on higher revenues in all three segments of Curtiss-Wright and a favorable mix in the Defense Electronics segment.
Curtiss-Wright’s total backlog at the end of the second quarter was $3.2 billion, which increased by 13% from the 2023-end backlog figure. This improvement can be attributed to higher demand from both aerospace and defense, as well as commercial markets.
New orders of $995 million rose 18% year over year, driven by the strong demand for the company’s naval defense and commercial aerospace products.
Segmental Performance
Aerospace & Industrial: Sales in this segment improved 3% year over year to $233.2 million. The upside was driven by higher commercial aerospace market sales, backed by strong demand as well as increased OEM sales of actuation and sensor products. Increased sales of surface treatment services on narrowbody and widebody platforms also benefitted this segment’s top line.
The adjusted operating income improved 6% to $37.9 million. Also, the adjusted operating margin expanded 40 bps to 16.2%. The upside was due to the solid absorption of higher sales and the initial benefits of Curtiss-Wright’s restructuring initiatives.
Defense Electronics: Sales in this segment advanced 16% year over year to $228.5 million. This rise was driven by increased sales of CW’s embedded computing equipment on various domestic and international helicopter programs. Also, higher sales of tactical battlefield communications equipment contributed to this segment’s sales growth.
The adjusted operating income increased 36% to $58.8 million. The adjusted operating margin expanded 390 bps to 25.7%, driven by favorable absorption and mix on higher revenues and the benefits of Curtiss-Wright’s cost containment initiatives.
Naval & Power: Sales in this segment increased 15% year over year to $323.1 million, driven by higher demand for various submarine programs and the CVN-81 aircraft carrier program. Higher sales contributions from the arresting systems equipment supporting various domestic and international customers also aided this segment. Moreover, increased commercial nuclear aftermarket sales supporting the maintenance of operating reactors in the United States are likely to have boosted this segment’s sales growth.
The segment's adjusted operating income decreased 6% to $46.6 million. The adjusted operating margin contracted 320 bps to 14.4% due to an unfavorable mix of products and the timing of development programs.
Financial Update
CW’s cash and cash equivalents as of Jun 30, 2024 were $382.6 million compared with $406.9 million as of Dec 31, 2023.
The long-term debt was $0.96 billion as of Jun 30, 2024 compared with $1.05 billion as of Dec 31, 2023.
The net cash flow from operating activities amounted to $65.7 million during the first six months of 2024 compared to $19.4 million generated in the prior-year period.
The adjusted free cash flow at the end of Jun 30, 2024 was $42.6 million compared with the adjusted free cash flow of $6.7 million in the previous year.
2024 Guidance
Curtiss-Wright has increased its guidance for 2024. The company now expects to generate adjusted earnings in the band of $10.40-$10.65 per share, up from its prior guided range of $10.10-$10.40 per share. The Zacks Consensus Estimate for CW’s 2024 earnings is pegged at $10.25, which is lower than the company’s guided range.
Curtiss-Wright now expects to generate sales in the range of $3.01-$3.06 billion compared to the earlier guidance in the band of $2.99-$3.04 billion. The Zacks Consensus Estimate for CW’s 2024 sales is pegged at $3.02 billion, which is lower than the midpoint of the company’s guided range.
The company now expects to generate free cash flow in the range of $425-$445 million during 2024, up from its prior guided range of $415-$435 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Curtiss-Wright has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Curtiss-Wright has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Curtiss-Wright belongs to the Zacks Aerospace - Defense Equipment industry. Another stock from the same industry, Teledyne Technologies (TDY - Free Report) , has gained 5% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Teledyne reported revenues of $1.37 billion in the last reported quarter, representing a year-over-year change of -3.6%. EPS of $4.58 for the same period compares with $4.67 a year ago.
Teledyne is expected to post earnings of $4.97 per share for the current quarter, representing a year-over-year change of -1.6%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.2%.
Teledyne has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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Curtiss-Wright (CW) Up 5.1% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Curtiss-Wright (CW - Free Report) . Shares have added about 5.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Curtiss-Wright 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.
Curtiss-Wright Beats on Q2 Earnings, Hikes '24 Sales View
Curtiss-Wright reported second-quarter adjusted earnings per share (EPS) of $2.67, which surpassed the Zacks Consensus Estimate of $2.24 by 19.2%. The bottom line also improved 24.2% from the year-ago quarter’s level of $2.15.
The company reported GAAP earnings of $2.58 per share, up 22.9% from the prior-year period’s earnings of $2.10.
The year-over-year upside can be attributed to higher sales and operating income, along with lower interest expenses incurred in the second quarter of 2024 compared to the year-ago quarter.
Operational Performance
In the quarter under review, the company’s net sales of $784.8 million went up 11.4% year over year. Also, the top line surpassed the Zacks Consensus Estimate of $736 million by 6.6%.
The company reported adjusted operating income of $133 million in the second quarter, up 16% year over year. The adjusted operating margin expanded 60 basis points (bps) to 17%. This upside was driven by favorable overhead absorption on higher revenues in all three segments of Curtiss-Wright and a favorable mix in the Defense Electronics segment.
Curtiss-Wright’s total backlog at the end of the second quarter was $3.2 billion, which increased by 13% from the 2023-end backlog figure. This improvement can be attributed to higher demand from both aerospace and defense, as well as commercial markets.
New orders of $995 million rose 18% year over year, driven by the strong demand for the company’s naval defense and commercial aerospace products.
Segmental Performance
Aerospace & Industrial: Sales in this segment improved 3% year over year to $233.2 million. The upside was driven by higher commercial aerospace market sales, backed by strong demand as well as increased OEM sales of actuation and sensor products. Increased sales of surface treatment services on narrowbody and widebody platforms also benefitted this segment’s top line.
The adjusted operating income improved 6% to $37.9 million. Also, the adjusted operating margin expanded 40 bps to 16.2%. The upside was due to the solid absorption of higher sales and the initial benefits of Curtiss-Wright’s restructuring initiatives.
Defense Electronics: Sales in this segment advanced 16% year over year to $228.5 million. This rise was driven by increased sales of CW’s embedded computing equipment on various domestic and international helicopter programs. Also, higher sales of tactical battlefield communications equipment contributed to this segment’s sales growth.
The adjusted operating income increased 36% to $58.8 million. The adjusted operating margin expanded 390 bps to 25.7%, driven by favorable absorption and mix on higher revenues and the benefits of Curtiss-Wright’s cost containment initiatives.
Naval & Power: Sales in this segment increased 15% year over year to $323.1 million, driven by higher demand for various submarine programs and the CVN-81 aircraft carrier program. Higher sales contributions from the arresting systems equipment supporting various domestic and international customers also aided this segment. Moreover, increased commercial nuclear aftermarket sales supporting the maintenance of operating reactors in the United States are likely to have boosted this segment’s sales growth.
The segment's adjusted operating income decreased 6% to $46.6 million. The adjusted operating margin contracted 320 bps to 14.4% due to an unfavorable mix of products and the timing of development programs.
Financial Update
CW’s cash and cash equivalents as of Jun 30, 2024 were $382.6 million compared with $406.9 million as of Dec 31, 2023.
The long-term debt was $0.96 billion as of Jun 30, 2024 compared with $1.05 billion as of Dec 31, 2023.
The net cash flow from operating activities amounted to $65.7 million during the first six months of 2024 compared to $19.4 million generated in the prior-year period.
The adjusted free cash flow at the end of Jun 30, 2024 was $42.6 million compared with the adjusted free cash flow of $6.7 million in the previous year.
2024 Guidance
Curtiss-Wright has increased its guidance for 2024. The company now expects to generate adjusted earnings in the band of $10.40-$10.65 per share, up from its prior guided range of $10.10-$10.40 per share. The Zacks Consensus Estimate for CW’s 2024 earnings is pegged at $10.25, which is lower than the company’s guided range.
Curtiss-Wright now expects to generate sales in the range of $3.01-$3.06 billion compared to the earlier guidance in the band of $2.99-$3.04 billion. The Zacks Consensus Estimate for CW’s 2024 sales is pegged at $3.02 billion, which is lower than the midpoint of the company’s guided range.
The company now expects to generate free cash flow in the range of $425-$445 million during 2024, up from its prior guided range of $415-$435 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Curtiss-Wright has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Curtiss-Wright has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Curtiss-Wright belongs to the Zacks Aerospace - Defense Equipment industry. Another stock from the same industry, Teledyne Technologies (TDY - Free Report) , has gained 5% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Teledyne reported revenues of $1.37 billion in the last reported quarter, representing a year-over-year change of -3.6%. EPS of $4.58 for the same period compares with $4.67 a year ago.
Teledyne is expected to post earnings of $4.97 per share for the current quarter, representing a year-over-year change of -1.6%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.2%.
Teledyne has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.