Woodward Inc. (WWD, Financial) announced impressive second-quarter revenue, exceeding predictions with a total of $883.63 million compared to the anticipated $834.97 million. The company attributes its solid performance to the commitment of its team amid challenging market conditions.
The aerospace division experienced significant expansion, attributed to the persistent demand for advanced defense solutions and vigorous commercial aftermarket activities, spurred by the extensive use of older aircraft models. However, there was a decline in commercial original equipment manufacturer (OEM) and defense aftermarket engagements.
Additionally, Woodward's industrial sector achieved double-digit growth in areas such as power generation, oil and gas, and marine transportation. This progress was somewhat hindered by a forecasted drop in China's market for on-highway natural gas trucks.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 10 analysts, the average target price for Woodward Inc (WWD, Financial) is $191.13 with a high estimate of $215.00 and a low estimate of $167.34. The average target implies an upside of 5.26% from the current price of $181.58. More detailed estimate data can be found on the Woodward Inc (WWD) Forecast page.
Based on the consensus recommendation from 12 brokerage firms, Woodward Inc's (WWD, Financial) average brokerage recommendation is currently 2.6, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Woodward Inc (WWD, Financial) in one year is $167.47, suggesting a downside of 7.77% from the current price of $181.58. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Woodward Inc (WWD) Summary page.
WWD Key Business Developments
Release Date: February 03, 2025
- Net Sales: $773 million, a decrease of 2% year over year.
- Earnings Per Share (EPS): $1.42 compared to $1.46 in the previous year.
- Adjusted Earnings Per Share: $1.35 compared to $1.45 in the previous year.
- Aerospace Segment Sales: $494 million, an increase of 7%.
- Commercial Aftermarket Sales: Up 19%.
- Defense OEM Sales: Up 21%.
- Defense Aftermarket Sales: Up 8%.
- Aerospace Segment Earnings: $95 million or 19.2% of segment sales.
- Industrial Segment Sales: $279 million, a decrease of 15%.
- Transportation Sales: Down 33% due to decline in China on highway sales.
- Core Industrial Sales: Up 7%.
- Industrial Segment Earnings: $40 million or 14.4% of segment sales.
- Research & Development (R&D): $30 million or 3.9% of sales.
- SG&A Expenses: $70 million or 9% of sales.
- Effective Tax Rate: 14.5%.
- Net Cash Provided by Operating Activities: $35 million.
- Capital Expenditures: $34 million.
- Free Cash Flow: $1 million.
- Debt Leverage: 1.5 times EBITDA.
- Shareholder Returns: $50 million returned, including $35 million in share repurchases and $15 million in dividends.
- 2025 Adjusted EPS Guidance: Narrowed to $5.85 to $6.25.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Woodward Inc (WWD, Financial) reported strong growth in both its aerospace segment and core industrial business, despite a slight overall decline in first-quarter results compared to last year.
- The company successfully managed labor across product lines during a pause in Boeing deliveries, optimizing operations through Kaizen events and workstation rearrangements.
- Woodward Inc (WWD) is making significant progress in its automation journey, with the commissioning of automated deburring stations at the Rock Cut Campus.
- The acquisition of Safran's Electronics & Defense electromechanical actuation business is expected to strengthen Woodward Inc (WWD)'s competitive position and expand its technology offerings.
- The company is on track to deliver its 2025 guidance, with a focus on profitable growth, operational excellence, and innovation to create long-term shareholder value.
Negative Points
- First-quarter net sales decreased by 2%, and earnings per share dropped from $1.46 to $1.42, indicating financial challenges.
- Industrial segment sales fell by 15%, primarily due to a significant decline in China on highway sales, which overshadowed core industrial growth.
- The company faces ongoing supply chain challenges post-COVID, with labor shortages and supplier quality issues impacting performance.
- Commercial OEM sales were down 10% due to the Boeing work stoppage, affecting overall aerospace segment performance.
- Free cash flow decreased to $1 million from $5 million in the previous year, reflecting lower earnings and financial constraints.
