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Woodward WWD is witnessing strong momentum, with shares having rallied 36.1% year to date compared with 19.6% and 19.4% growth of the sub-industry and S&P Composite, respectively.
With healthy fundamentals and strong growth opportunities, this Zacks Rank #2 (Buy) stock appears to be a solid investment option at the moment.
Apart from a favorable rank, WWD has a Growth Score of A. Per Zacks proprietary methodology, stocks with a combination of a Zacks Rank #1 (Strong Buy) or #2 and a VGM Score of A or B offer solid investment opportunities.
Woodward is a leading designer, manufacturer and service provider of energy control and optimization solutions. The company provides a wide array of products for fuel, combustion, fluid, actuation and electronic applications, which serve the commercial aerospace, business jet, military and energy markets.
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Factors Driving Performance
Woodward’s sales performance is benefiting from strong end market demand across most of the verticals. Also, the strategic investments, made to bolster supply chain, are other tailwinds. Price realization, favorable product mix along with productivity and efficiency improvements is driving bottom line improvement.
The company recently reported impressive fourth-quarter fiscal 2023 results, with adjusted net earnings of $1.33 per share, beating the Zacks Consensus Estimate by 4.7%. In the year-ago quarter, WWD reported adjusted net earnings of 84 cents. Quarterly net sales moved up 21% year over year to $777 million. Improved sales in the Aerospace and Industrial segments resulted in this uptick.
Higher commercial OEM and commercial aftermarket sales due to improving passenger traffic and fleet utilization are driving steady momentum in the Aerospace segment. In the last reported quarter, sales were up 11% year over year to $455 million.
The Aerospace segment is likely to benefit from strength in commercial markets as well as higher defense activity. For fiscal 2024, management expects Aerospace sales growth to be between 10% and 14%.
The Industrial segment is gaining from solid demand for power generation, especially in Asia, and continued requirement for backup power for data centers. In the last reported quarter, segmental net sales totaled $322 million, up 39% from the prior-year quarter due to higher volumes across all markets.
Increasing investment in LNG infrastructure development and higher demand for alternative fuels across the marine industry are positives. The segment is also likely to be aided by momentum in the global marine market brought on by higher utilization and rising shipbuilding rates. For fiscal 2024, management expects Industrial segment’s sales growth to be between 4% and 6%.
The company’s capital allocation strategy to enhance long-term shareholders’ value is noteworthy. Woodward repurchased shares worth $126 million in fiscal 2023. In January 2022, WWD authorized a new $800 million two-year stock repurchase program, reinforcing its financial position and positive outlook. The company has $228 million remaining under its share repurchase authorization.