Woodward, Inc. WWD declared a definitive agreement to acquire Safran Electronics & Defense’s electromechanical actuation business located in the United States, Mexico and Canada. This strategic move will include obtaining intellectual property, operational assets, skilled talent and long-term customer agreements related to Horizontal Stabilizer Trim Actuation (“HSTA”) systems. These systems play a critical role in aircraft stabilization, ensuring safe and efficient flight operations with notable applications like the Airbus A350.
The HSTA technology represents cutting-edge advancements in aviation electromechanical control. In addition to HSTA systems, Woodward will also gain a portfolio of other electromechanical products and electronic control units catering to commercial airliners and business aircraft applications. This acquisition is expected to enhance Woodward's capabilities and solidify its position as a key technology provider for the next generation of aircraft.
Woodward highlighted that the acquisition aligns with its growth and innovation strategy. The deal increases the company’s shipset content for existing widebody programs and strengthens its platform for next-generation single-aisle aircraft. WWD highlighted this as an “excellent fit” for its complementary activities as the company focuses on high-potential aerospace and industrial product lines, driving long-term value for its customers and shareholders.
Woodward, Inc. Price and Consensus
Woodward, Inc. Price and Consensus
Woodward, Inc. price-consensus-chart | Woodward, Inc. Quote
The deal is expected to close by mid-2025, subject to pending regulatory approvals and the fulfillment of customary conditions. While the financial terms of the transaction remain undisclosed, Woodward noted that the acquisition is not financially material.
This acquisition reinforces Woodward’s commitment to innovation and positions it as a leader in advanced aerospace solutions, ensuring the company remains at the forefront of the evolving aviation industry.
Key Sector Strength Drives Growth for WWD
Woodward is experiencing solid growth across major end markets, driven by robust sales in its Aerospace and Industrial segments. In the fourth quarter of fiscal 2024, net sales for the segment were up 22% year over year while fiscal year revenues were up 15%. Woodward expects to gain from high-growth programs like the LEAP and GTF engines, which are expected to drive service growth.
Geopolitical developments have been driving demand for defense products and the company expects strong growth across its defense portfolio in 2025, including a considerable increase in smart defense production. For fiscal 2025, Aerospace segment revenues are anticipated to increase in the range of 6-13%, whereas segment earnings (as a percentage of revenues) are expected to be 20-21%.
Woodward’s Industrial segment is benefiting from the strong demand for power generation and the ongoing need for backup power in data centers. Additionally, the growing power demand to ensure grid stability serves as a significant tailwind. The increasing adoption of alternative fuels in the marine industry, coupled with higher global marine market activity driven by rising shipbuilding rates and increased utilization, is also a positive factor.
In the oil and gas sector, favorable investment trends in China, the Middle East and India’s refining and petrochemical industries further contribute to growth. Driven by strength in these markets, core Industrial segment sales are expected to grow 3% to 7%, despite challenges in the China on-highway market.
However, China’s on-highway natural-gas truck business weighs on the transportation unit due to low production from local economic woes. Revenues from this business are likely to be $40 million for fiscal 2025, down from $175 million in fiscal 2024. As a result, Industrial revenues are expected to decline in the 7-11% band.
WWD’s Zacks Rank & Stock Price Performance
Woodward currently carries a Zacks Rank #3 (Hold). Shares of the company have soared 24.9% in the past year compared with the industry's growth of 34.7%.
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Stocks to Consider
Some better-ranked stocks from the broader sector are Leonardo DRS, Inc. DRS, Triumph Group, Inc. TGI and Curtiss-Wright Corporation CW. DRS and TGI sport a Zacks Rank #1 (Strong Buy) each, whereas CW presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for DRS' earnings per share (EPS) is pegged at 92 cents, unchanged in the past seven days. In the last reported quarter, Leonardo DRS delivered an earnings surprise of 22.27%. The company’s long-term earnings growth rate is 21.2%. Its shares have jumped 71.2% in the past year.
The Zacks Consensus Estimate for TGI’s fiscal 2025 EPS is pegged at 60 cents, unchanged in the past 30 days. Triumph Group earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, while missing twice, with the average surprise being 100.48%. Its shares have increased 15.7% in the past six months.
CW earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 12.78%. In the last reported quarter, Curtiss-Wright Corporation delivered an earnings surprise of 10%. Its shares have surged 28.6% in the past six months.
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