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Woodward (WWD) Appears Primed for Uptrend With 40.6% YTD Gain
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Woodward (WWD - Free Report) is witnessing steady momentum, with shares having rallied 40.6% year to date compared with 26.6% and 23.4% growth of the sub-industry and S&P Composite, respectively.
Woodward is a leading designer, manufacturer and service provider of energy control and optimization solutions. The company provides a wide array of products for fuel, combustion, fluid, actuation and electronic applications, which serve the commercial aerospace, business jet, military and energy markets.
With healthy fundamentals and strong growth opportunities, this Zacks Rank #2 (Buy) stock appears to be a solid investment option at the moment.
Apart from a favorable rank, WWD has a VGM Score of A. Per Zacks proprietary methodology, stocks with a combination of a Zacks Rank #1 (Strong Buy) or 2 and a VGM Score of A or B offer solid investment opportunities.
Woodward’s earnings per share are expected to climb 16.7% and 15% on a year-over-year basis to $4.92 and $5.65 in fiscal 2024 and 2025, respectively. The Zacks Consensus Estimate for fiscal 2024 and 2025 earnings have improved by 7% and 14.8%, respectively, in the past 60 days.
Image Source: Zacks Investment Research
Revenues for fiscal 2024 and 2025 are forecast to rise 9.6% and 5.6% to $3.2 billion and $3.37 billion, respectively.
WWD’s long-term earnings growth rate is pegged at 15.6%.
Growth Catalysts
Woodward’s sales performance is benefiting from strong end-market demand across most of the verticals. Also, the strategic investments made to strengthen the supply chain are other tailwinds. Price realization, favorable product mix and productivity and efficiency improvements are driving bottom-line improvement.
The Industrial segment is gaining from solid demand for power generation, especially in Asia and continued requirement for backup power for data centers. In the last reported quarter, segmental net sales totaled $322 million, up 39% from the prior-year quarter due to higher volumes across all markets.
Increasing investment in LNG infrastructure development and higher demand for alternative fuels across the marine industry are positives. The Industrial segment is also likely to be aided by momentum in the global marine market brought on by higher utilization and rising shipbuilding rates. For fiscal 2024, management expects Industrial segment’s sales growth to be between 4% and 6%.
Higher commercial OEM and commercial aftermarket sales due to improving passenger traffic and fleet utilization are driving steady momentum in the Aerospace segment. In the last reported quarter, sales were up 11% year over year to $455 million.
The Aerospace segment is likely to gain from momentum in commercial markets as well as higher defense activity. For fiscal 2024, management expects the Aerospace segment’s sales growth to be between 10% and 14%.
The company’s capital allocation strategy to enhance long-term shareholders’ value is noteworthy. Woodward repurchased shares worth $126 million in fiscal 2023. In January 2022, WWD authorized a new $800 million two-year stock repurchase program, reinforcing its financial position and positive outlook. The company has $228 million remaining under its share repurchase authorization.
Softness in defense OEM sales due to lower guided weapons sales is a major headwind. Low visibility into the China on-highway natural gas truck market, along with global macroeconomic weakness, forex volatility and rising costs, are added concerns.
Inflationary pressure and higher annual incentive compensation are weighing down its bottom-line performance.
The Zacks Consensus Estimate for Blackbaud’s 2023 EPS improved 1.8% in the past 60 days to $3.86. BLKB’s long-term earnings growth rate is 23.4%. Blackbaud’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 10.6%. Shares of BLKB have surged 51% in the past year.
The Zacks Consensus for NETGEAR’s 2023 EPS has remained unchanged in the past 30 days at a loss of 9 cents. NTGR’s earnings outpaced the Zacks Consensus Estimate in three of the last four quarters while missing in the remaining quarter. The average surprise was 127.5%. Shares of NTGR are down 21.2% in the past year.
The Zacks Consensus Estimate for Watts Water Technologies 2023 EPS has improved by 3.9% in the past 60 days to $8.08.
WTS’ earnings outpaced the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 11.8%. Shares of WTS have jumped 41.6% in the past year.
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Woodward (WWD) Appears Primed for Uptrend With 40.6% YTD Gain
Woodward (WWD - Free Report) is witnessing steady momentum, with shares having rallied 40.6% year to date compared with 26.6% and 23.4% growth of the sub-industry and S&P Composite, respectively.
Woodward is a leading designer, manufacturer and service provider of energy control and optimization solutions. The company provides a wide array of products for fuel, combustion, fluid, actuation and electronic applications, which serve the commercial aerospace, business jet, military and energy markets.
With healthy fundamentals and strong growth opportunities, this Zacks Rank #2 (Buy) stock appears to be a solid investment option at the moment.
Apart from a favorable rank, WWD has a VGM Score of A. Per Zacks proprietary methodology, stocks with a combination of a Zacks Rank #1 (Strong Buy) or 2 and a VGM Score of A or B offer solid investment opportunities.
Woodward’s earnings per share are expected to climb 16.7% and 15% on a year-over-year basis to $4.92 and $5.65 in fiscal 2024 and 2025, respectively. The Zacks Consensus Estimate for fiscal 2024 and 2025 earnings have improved by 7% and 14.8%, respectively, in the past 60 days.
Image Source: Zacks Investment Research
Revenues for fiscal 2024 and 2025 are forecast to rise 9.6% and 5.6% to $3.2 billion and $3.37 billion, respectively.
WWD’s long-term earnings growth rate is pegged at 15.6%.
Growth Catalysts
Woodward’s sales performance is benefiting from strong end-market demand across most of the verticals. Also, the strategic investments made to strengthen the supply chain are other tailwinds. Price realization, favorable product mix and productivity and efficiency improvements are driving bottom-line improvement.
The Industrial segment is gaining from solid demand for power generation, especially in Asia and continued requirement for backup power for data centers. In the last reported quarter, segmental net sales totaled $322 million, up 39% from the prior-year quarter due to higher volumes across all markets.
Increasing investment in LNG infrastructure development and higher demand for alternative fuels across the marine industry are positives. The Industrial segment is also likely to be aided by momentum in the global marine market brought on by higher utilization and rising shipbuilding rates. For fiscal 2024, management expects Industrial segment’s sales growth to be between 4% and 6%.
Higher commercial OEM and commercial aftermarket sales due to improving passenger traffic and fleet utilization are driving steady momentum in the Aerospace segment. In the last reported quarter, sales were up 11% year over year to $455 million.
The Aerospace segment is likely to gain from momentum in commercial markets as well as higher defense activity. For fiscal 2024, management expects the Aerospace segment’s sales growth to be between 10% and 14%.
The company’s capital allocation strategy to enhance long-term shareholders’ value is noteworthy. Woodward repurchased shares worth $126 million in fiscal 2023. In January 2022, WWD authorized a new $800 million two-year stock repurchase program, reinforcing its financial position and positive outlook. The company has $228 million remaining under its share repurchase authorization.
Softness in defense OEM sales due to lower guided weapons sales is a major headwind. Low visibility into the China on-highway natural gas truck market, along with global macroeconomic weakness, forex volatility and rising costs, are added concerns.
Inflationary pressure and higher annual incentive compensation are weighing down its bottom-line performance.
Other Key Picks
Some other top-ranked stocks worth consideration in the broader technology space are Blackbaud (BLKB - Free Report) , NETGEAR (NTGR - Free Report) and Watts Water Technologies (WTS - Free Report) . While Watts Water Technologies sports a Zacks Rank #1 (Strong Buy), Blackbaud and NETGEAR, each carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Blackbaud’s 2023 EPS improved 1.8% in the past 60 days to $3.86. BLKB’s long-term earnings growth rate is 23.4%.
Blackbaud’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 10.6%. Shares of BLKB have surged 51% in the past year.
The Zacks Consensus for NETGEAR’s 2023 EPS has remained unchanged in the past 30 days at a loss of 9 cents. NTGR’s earnings outpaced the Zacks Consensus Estimate in three of the last four quarters while missing in the remaining quarter. The average surprise was 127.5%. Shares of NTGR are down 21.2% in the past year.
The Zacks Consensus Estimate for Watts Water Technologies 2023 EPS has improved by 3.9% in the past 60 days to $8.08.
WTS’ earnings outpaced the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 11.8%. Shares of WTS have jumped 41.6% in the past year.