It has been about a month since the last earnings report for Woodward, Inc. (WWD - Free Report) . Shares have lost about 3% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it 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 Beats Earnings and Revenue Estimates in Q3
Woodward reported third-quarter fiscal 2017 earnings of $0.85 per share, beating the Zacks Consensus Estimate of $0.76 by 11.8%. Earnings also increased 4.9% from the prior-year figure of $0.81.
The company’s quarterly net sales of $548.6 million surpassed the Zacks Consensus Estimate of $533 million by 2.9%. Revenues also increased 8.1% from the year-ago figure of $507.7 million, mainly on account of growth in sales witnessed in the Aerospace segment.
Woodward’s total costs and expenses increased 8% year over year to $479.9 million in the reported quarter. The upside was driven by higher cost of goods sold, selling, general, and administrative expenses, research and development expenses as well as interest expenses.
Quarterly Segmental Performance
Aerospace: Segment revenues were up 15.4% year over year to $356 million, primarily driven by higher aftermarket sales in commercial markets and launch of next generation aircraft.
Earnings came in at $67.2 million, up 16.4% on the back of higher sales volume.
Industrial: Segment revenues totaled $192.6 million, down 3.2% year over year due to continued weakness in sales related to industrial gas and wind turbines.
Again, earnings tanked 5% to $20.9 million primarily due to lower sales volume.
Woodward’s cash and cash equivalents as of Jun 30, 2017 were $89.0 million compared with $81.1 million as of Sep 30, 2016.
Long-term debt (excluding current portion) was $574.2 million as of Jun 30, 2017, down from $577.2 million as of Sep 30, 2016.
Free cash inflow was $31.8 million in the fiscal third quarter compared with 19.1 million in the year-ago quarter.
In the first nine months of fiscal 2017, net cash generated from operating activities was $183.8 million compared with $362.5 million in the prior-year quarter.
In the first nine months of fiscal 2017 payments for property, plant and equipment were $65.1 million compared with $128.6 million in the year-ago period.
Fiscal 2017 Guidance
Net sales are expected to be about $2.1 billion. The company now expects earnings in the band of $3.05–$3.15 per share compared with previous projection of $2.95–$3.25.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter.
Woodward, Inc. Price and Consensus
At this time, the stock has a poor Growth Score of F, however its Momentum is doing a lot better with a B. 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.
Our style scores indicate that the stock is more suitable for momentum investors than value investors.
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #4 (Sell). We are looking for a below average return from the stock in the next few months.