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Woodward (WWD - Free Report) is a Zacks Rank #1 (Strong Buy) that designs, manufactures, and services control solutions for the aerospace and industrial markets worldwide.
The stock has had a big run since reporting earnings last May, up over 50%. Woodward has since reported three more earnings beats, with the recent quarter taking the stock to all-time highs.
Unfortunately for investors, the quarter was a sell-the-news event. After gapping higher by 5%, the stock reversed lower and is trading below the pre-earnings level.
The pullback will likely offer a long-term opportunity as earnings estimates continue to track in the right direction.
About the Company
Woodward was founded in 1870 and is headquartered in Fort Collins, CO. The company has 8,800 full-time employees and has a market cap of $8 billion.
The company operates in two segments, Aerospace and Industrial.
The Aerospace segment’s products include metering units, actuators, air valves, fuel pumps, fuel nozzles, specialty valves, thrust reverser actuation systems for turbine engines and nacelles, flight deck controls, actuators, motors, and sensors for aircraft.
The Industrial segment offers actuators, valves, pumps, fuel injection systems, solenoids, ignition systems, speed controls, electronics and software, and sensors.
The stock has a Zacks Style Score of “B” in Growth and “A” in Momentum. It also posts a Style Score of “D in Value, with a Forward PE of 26. The company also pays a small dividend of 0.6%.
Q1 Earnings Beat
Earlier this week, Woodward reported Q1 EPS at $1.45 v $1.10 expected, or a 32% surprise to the upside. Revenues came in at $787M v the $739M and the company raised FY guidance citing broad-based strength across Industrial, with significant expansion in transportation.
FY24 is now seen at a range of $5.00-$5.40 v the $4.95 expected. Revenues are expected in a range of $3.15-3.30B versus the $3.19B expected. Free Cash Flow is seen at $300-350M v the $275-325M prior.
Management cited significant sales growth and margin expansion as the reason for the beat. They added that it has been a strong start to the year, reflecting continued positive momentum, including robust end-market demand, and improved operational performance.
The stock had a positive reaction at first but has since reversed lower.
Analyst Estimates
Since earnings just came out, investors should be looking at what analysts have been doing with estimates over the last 7 days.
For the current quarter, analysts have lifted estimates from $1.22 to $1.25, or 2%. This continues the momentum seen over the last 90 days, which has seen estimates go higher by 16%.
Looking at the current year, we see a similar move, with estimates going higher by 5% over the last 7 days and up 13% over the last 90 days.
Analysts expect the momentum next year to continue. Over the last 7 days, estimates have been raised by 1.5%, and 17% over the last 90 days.
The Technicals
The stock just traded all-time highs and reversed lower. This signals that buyers can have patience with their entries, so let us go over some buyable levels.
The 50-day moving average is $135.40 and the 200-day moving average is $124. If for some reason those levels were to break on a market selloff, the 61.8% Fib retracement from the 2023 spring lows to recent highs is $112.
WWD is up over 50% off the 2023 lows, so some backing and filling might be warranted. However, when you look at the longer term, the chart looks great and a move back above the recent highs would signal continued momentum.
Bottom Line
Woodward is not a company everyone knows, but this stock is trending up better than most names. Inventors should be looking to buy any pullbacks for a long-term resumption of that trend.
Moving averages and Fibonacci levels are great signals to alert for an entry, just make sure support is confirmed before jumping in.
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Bull of the Day: Woodward (WWD)
Woodward (WWD - Free Report) is a Zacks Rank #1 (Strong Buy) that designs, manufactures, and services control solutions for the aerospace and industrial markets worldwide.
The stock has had a big run since reporting earnings last May, up over 50%. Woodward has since reported three more earnings beats, with the recent quarter taking the stock to all-time highs.
Unfortunately for investors, the quarter was a sell-the-news event. After gapping higher by 5%, the stock reversed lower and is trading below the pre-earnings level.
The pullback will likely offer a long-term opportunity as earnings estimates continue to track in the right direction.
About the Company
Woodward was founded in 1870 and is headquartered in Fort Collins, CO. The company has 8,800 full-time employees and has a market cap of $8 billion.
The company operates in two segments, Aerospace and Industrial.
The Aerospace segment’s products include metering units, actuators, air valves, fuel pumps, fuel nozzles, specialty valves, thrust reverser actuation systems for turbine engines and nacelles, flight deck controls, actuators, motors, and sensors for aircraft.
The Industrial segment offers actuators, valves, pumps, fuel injection systems, solenoids, ignition systems, speed controls, electronics and software, and sensors.
The stock has a Zacks Style Score of “B” in Growth and “A” in Momentum. It also posts a Style Score of “D in Value, with a Forward PE of 26. The company also pays a small dividend of 0.6%.
Q1 Earnings Beat
Earlier this week, Woodward reported Q1 EPS at $1.45 v $1.10 expected, or a 32% surprise to the upside. Revenues came in at $787M v the $739M and the company raised FY guidance citing broad-based strength across Industrial, with significant expansion in transportation.
FY24 is now seen at a range of $5.00-$5.40 v the $4.95 expected. Revenues are expected in a range of $3.15-3.30B versus the $3.19B expected. Free Cash Flow is seen at $300-350M v the $275-325M prior.
Management cited significant sales growth and margin expansion as the reason for the beat. They added that it has been a strong start to the year, reflecting continued positive momentum, including robust end-market demand, and improved operational performance.
The stock had a positive reaction at first but has since reversed lower.
Analyst Estimates
Since earnings just came out, investors should be looking at what analysts have been doing with estimates over the last 7 days.
For the current quarter, analysts have lifted estimates from $1.22 to $1.25, or 2%. This continues the momentum seen over the last 90 days, which has seen estimates go higher by 16%.
Looking at the current year, we see a similar move, with estimates going higher by 5% over the last 7 days and up 13% over the last 90 days.
Analysts expect the momentum next year to continue. Over the last 7 days, estimates have been raised by 1.5%, and 17% over the last 90 days.
The Technicals
The stock just traded all-time highs and reversed lower. This signals that buyers can have patience with their entries, so let us go over some buyable levels.
The 50-day moving average is $135.40 and the 200-day moving average is $124. If for some reason those levels were to break on a market selloff, the 61.8% Fib retracement from the 2023 spring lows to recent highs is $112.
WWD is up over 50% off the 2023 lows, so some backing and filling might be warranted. However, when you look at the longer term, the chart looks great and a move back above the recent highs would signal continued momentum.
Bottom Line
Woodward is not a company everyone knows, but this stock is trending up better than most names. Inventors should be looking to buy any pullbacks for a long-term resumption of that trend.
Moving averages and Fibonacci levels are great signals to alert for an entry, just make sure support is confirmed before jumping in.