It has been about a month since the last earnings report for Woodward (WWD Quick QuoteWWD - Free Report) . Shares have lost about 2.8% in that time frame, underperforming the S&P 500.

But investors have to be wondering, 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 catalysts.

WWD Q3 Earnings Beat on Aerospace and Industrial Strength

Woodward reported third-quarter fiscal 2026 adjusted earnings of $2.52 per share, up 43.2% year over year. The bottom line beat the Zacks Consensus Estimate of $2.39 by 5.4%.

Net sales rose 21.2% to $1.11 billion but missed the consensus mark of $1.114 billion by 0.4%. Commercial OEM sales surged 34%, while demand remained broad across Woodward's Industrial markets.

Aerospace Sales Accelerate

Aerospace sales increased 19% to $709 million. Commercial OEM revenues reached $234 million as aircraft production rates increased, while commercial services generated $268 million on continued legacy aircraft servicing and growing LEAP and GTF activity. Management said service inputs remained steady to higher across newer engine platforms.

Defense OEM sales declined 6% to $141 million because of a one-time revenue recognition adjustment. Excluding that item, sales would have grown in the mid-single digits. Defense services rose 20% to $66 million. Segment earnings advanced 35% to $170 million, and margin expanded 290 basis points (bps) to 24%. A retroactive contract pricing adjustment added about 100 bps to the margin.

Industrial Growth Broadens

Industrial sales climbed 26% to $401 million. Transportation revenues increased 40% to $180 million, aided by strong marine demand and $40 million of China on-highway sales. Power generation rose 19% to $145 million on robust data-center demand for prime and backup power.

Oil and gas revenues advanced 11% to $76 million, supported by liquefied natural gas infrastructure activity and improving upstream capital spending.
Industrial earnings jumped 86% to $88 million, while margin expanded 720 bps to 22.1%. China on-highway contributed about 90 bps to the margin. Core Industrial sales, which exclude that business, grew 19% to $361 million.

Pricing and Productivity Support Profits

Adjusted EBITDA increased 50% to $249 million, while adjusted EBIT rose 58% to $217 million. Total costs and expenses were $916.2 million compared with $788.6 million a year earlier. Profitability benefited from higher volume and pricing, partly offset by inflation, unfavorable mix and a higher tax burden. The adjusted effective tax rate rose to 24.2% from 14.5%.

Companywide price realization was 10% in the quarter. Management expects full-year pricing of about 8%, with a more normal 3-5% range going forward. Lean initiatives are beginning to improve factory productivity. Automation across machining, inspection and material handling is intended to reduce the need for roughly 1,000 incremental hires by 2029.

Cash Flow Funds Capacity Expansion

Net cash provided by operating activities increased 17% to $147 million. Free cash flow declined 12% to $87 million as capital expenditures more than doubled to $60 million. Management expects spending to rise sharply in the fourth quarter, mainly to finish the Spartanburg facility and purchase equipment for the A350 spoiler program.

Woodward ended June with $475 million in cash and cash equivalents and $1.34 billion of total debt. EBITDA leverage was 1.6 times. Through nine months, operating cash flow reached $352 million and free cash flow totaled $196 million. The company returned $608 million to shareholders, including $553 million through repurchases and $55 million through dividends.

Fiscal 2026 Outlook

WWD raised its fiscal 2026 adjusted earnings guidance to $9.30-$9.50 per share from $9.15-$9.45. The company maintained its sales growth outlook of 20-23%, free cash flow forecast of $300-$350 million and capital expenditure plan of approximately $290 million. It expects to return about $700 million to shareholders for the full year.

Aerospace sales are now expected to grow 21-23%, with a segment margin of about 23.5%. Industrial sales growth is projected at 19-21%, up from 18-20%, while segment margin is expected to reach roughly 19%. The adjusted effective tax rate forecast increased to approximately 22.5%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in estimates review.

VGM Scores

At this time, Woodward has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for value investors.

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 upward for the stock, and the magnitude of these revisions looks promising. Notably, Woodward has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.