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Woodward (WWD) Down 3.4% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Woodward (WWD - Free Report) . Shares have lost about 3.4% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Woodward due for a breakout? 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's Q1 Earnings Beat Estimates
Woodward reported first-quarter fiscal 2025 adjusted net EPS of $1.35, which declined 7% year over year. The figure beat the Zacks Consensus Estimate by 18.4%.
Quarterly net sales declined 2% year over year to $773 million and missed the consensus estimate by 0.7%. The weakness in sales related to China on-highway natural-gas trucks and a stoppage in deliveries of certain product lines to Boeing were the main reason for year-over-year decline in revenues.
Woodward has reiterated all guidance for fiscal 2025 except for the adjusted tax rate and earnings per share. It now expects the adjusted effective tax rate to be 19% compared with 20% earlier. Adjusted EPS is expected to be between $5.85 and $6.25 (previously projected range: $5.75-$6.25).
Segment Results
Aerospace: Net sales were $494 million, up 7% year over year. We predicted the metric to be $501.7 million.
Defense OEM and defense aftermarket sales were up 21% and 8%, respectively, year over year. Commercial aftermarket sales increased 19%, attributed to robust passenger traffic and higher legacy aircraft utilization.
Commercial OEM sales fell 10% year over year to $154 million, due to the impact from the Boeing work stoppage and supply-chain challenges.
Segmental earnings were $95 million, up from $79 million a year ago. The increase in segment earnings was a result of price realization which was partly offset by inflationary pressure, lower volumes and unfavorable sales mix.
Industrial: Net sales totaled $279 million, down 15% year over year. A 33% decline in transportation sales offset 7% revenue growth, witnessed in both power generation and oil and gas sectors. We expected the metric to be $278.3 million.
Core industrial sales, which excludes China on-highway business, were up 7%.
The transportation segment was extensively affected by weakness in China’s on-highway natural gas trucks business. This business was impacted by local economic troubles. Revenues were $10 million in the quarter under review. Also, within oil & gas, soaring domestic production levels in the United States were not translating into upstream service growth, due to low commodity pricing.
Segmental earnings were $40 million, down from $67 million in the year-ago quarter. Industrial earnings were affected by lower China on-highway volume and an unfavorable mix, which was partly offset by price realization.
Margin Performance
Gross margin was down 150 basis points year over year to 24.5%.
Total costs and expenses were $670.9 million, down 0.9% year over year. Adjusted EBITDA was $135 million compared with $148 million a year ago.
Cash Flow & Liquidity
As of Dec. 31, 2024, Woodward had $283.7 million in cash and cash equivalents with $483.2 million of long-term debt (less the current portion).
For the quarter ended Dec. 31, 2024, Woodward generated $35 million of net cash from operating activities compared with $47 million reported in the prior-year period.
Free cash flow was $1 million compared with $5 million in the year-ago period. This downtick was due to lower earnings, which was partly offset by reduced capital expenditures.
In the quarter under review, Woodward returned $50 million to its shareholders in the form of $15 million of dividends and $35 million worth of share repurchases.
Fiscal Guidance
Woodward continues to expect fiscal 2025 sales to be between $3.3 billion and $3.5 billion. Aerospace segment revenues are anticipated to increase in the range of 6-13%. Industrial segment revenues are expected to decline in the band of 7-11%.
Free cash flow is anticipated to be between $350 million and $400 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Woodward has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, 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 D. 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 #2 (Buy). We expect an above average return from the stock in the next few months.
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Woodward (WWD) Down 3.4% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Woodward (WWD - Free Report) . Shares have lost about 3.4% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Woodward due for a breakout? 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's Q1 Earnings Beat Estimates
Woodward reported first-quarter fiscal 2025 adjusted net EPS of $1.35, which declined 7% year over year. The figure beat the Zacks Consensus Estimate by 18.4%.
Quarterly net sales declined 2% year over year to $773 million and missed the consensus estimate by 0.7%. The weakness in sales related to China on-highway natural-gas trucks and a stoppage in deliveries of certain product lines to Boeing were the main reason for year-over-year decline in revenues.
Woodward has reiterated all guidance for fiscal 2025 except for the adjusted tax rate and earnings per share. It now expects the adjusted effective tax rate to be 19% compared with 20% earlier. Adjusted EPS is expected to be between $5.85 and $6.25 (previously projected range: $5.75-$6.25).
Segment Results
Aerospace: Net sales were $494 million, up 7% year over year. We predicted the metric to be $501.7 million.
Defense OEM and defense aftermarket sales were up 21% and 8%, respectively, year over year. Commercial aftermarket sales increased 19%, attributed to robust passenger traffic and higher legacy aircraft utilization.
Commercial OEM sales fell 10% year over year to $154 million, due to the impact from the Boeing work stoppage and supply-chain challenges.
Segmental earnings were $95 million, up from $79 million a year ago. The increase in segment earnings was a result of price realization which was partly offset by inflationary pressure, lower volumes and unfavorable sales mix.
Industrial: Net sales totaled $279 million, down 15% year over year. A 33% decline in transportation sales offset 7% revenue growth, witnessed in both power generation and oil and gas sectors. We expected the metric to be $278.3 million.
Core industrial sales, which excludes China on-highway business, were up 7%.
The transportation segment was extensively affected by weakness in China’s on-highway natural gas trucks business. This business was impacted by local economic troubles. Revenues were $10 million in the quarter under review. Also, within oil & gas, soaring domestic production levels in the United States were not translating into upstream service growth, due to low commodity pricing.
Segmental earnings were $40 million, down from $67 million in the year-ago quarter. Industrial earnings were affected by lower China on-highway volume and an unfavorable mix, which was partly offset by price realization.
Margin Performance
Gross margin was down 150 basis points year over year to 24.5%.
Total costs and expenses were $670.9 million, down 0.9% year over year. Adjusted EBITDA was $135 million compared with $148 million a year ago.
Cash Flow & Liquidity
As of Dec. 31, 2024, Woodward had $283.7 million in cash and cash equivalents with $483.2 million of long-term debt (less the current portion).
For the quarter ended Dec. 31, 2024, Woodward generated $35 million of net cash from operating activities compared with $47 million reported in the prior-year period.
Free cash flow was $1 million compared with $5 million in the year-ago period. This downtick was due to lower earnings, which was partly offset by reduced capital expenditures.
In the quarter under review, Woodward returned $50 million to its shareholders in the form of $15 million of dividends and $35 million worth of share repurchases.
Fiscal Guidance
Woodward continues to expect fiscal 2025 sales to be between $3.3 billion and $3.5 billion. Aerospace segment revenues are anticipated to increase in the range of 6-13%. Industrial segment revenues are expected to decline in the band of 7-11%.
Free cash flow is anticipated to be between $350 million and $400 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Woodward has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, 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 D. 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 #2 (Buy). We expect an above average return from the stock in the next few months.