Woodward (WWD) AI Stock Analysis

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Woodward

(NASDAQ:WWD)

73Outperform

Woodward is positioned well financially with strong growth and profitability metrics. Technical and valuation indicators suggest caution, with the stock appearing expensive and mixed short-term price trends. The earnings call presented both strengths in aerospace and challenges in industrial sales, contributing to a moderate outlook.

Positive Factors

Earnings Guidance

WWD's F25 guidance for a flattish EPS year is a better result than expected, given significant challenges.

Financial Performance

Q1 results were ahead on lower tax and better Aero EBIT, aided by strong aero A/M & Defense OE sales.

Operational Efficiency

The company continues to standardize operations and improve workflow, which supports ongoing margin improvements and operating leverage.

Negative Factors

China Market Challenges

China natural gas business guide is meaningfully lower due to continued elevated levels of dealer inventory and weaker economic growth.

Delivery Delays

WWD has not restarted deliveries to Boeing, and channel inventories are elevated.

Sales Growth Uncertainty

Aero A/M comps stiffen, which augurs a Y/Y growth deceleration in Q2-Q4.

Woodward (WWD) vs. S&P 500 (SPY)

Market Cap

$10.80B

Dividend Yield0.57%

Average Volume (3M)552.22K

Price to Earnings (P/E)30.3

Beta (1Y)1.11

Revenue Growth7.38%

EPS Growth26.61%

CountryUS

Employees9,300

SectorIndustrials

Sector Strength70

IndustryAerospace & Defense

Share Statistics

EPS (TTM)5.98

Shares Outstanding59,359,882

10 Day Avg. Volume433,198

30 Day Avg. Volume552,215

Financial Highlights & Ratios

PEG Ratio1.14

Price to Book (P/B)N/A

Price to Sales (P/S)3.32

Price to Cash Flow (P/CF)79.70

P/FCF Ratio239.40

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$194.83

Price Target Upside7.13% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering6

Woodward Business Overview & Revenue Model

Company DescriptionWoodward, Inc. (WWD) is a leading designer and manufacturer of control systems and components for the aerospace and industrial markets. The company specializes in providing innovative solutions for energy control and optimization in aircraft, industrial engines, turbines, and other energy-related systems. Woodward's products are designed to enhance the efficiency, reliability, and performance of its customers' applications, serving sectors such as commercial and military aerospace, power generation, and transportation.

How the Company Makes MoneyWoodward generates revenue primarily through the sale of its advanced control systems and components to the aerospace and industrial sectors. The key revenue streams include sales of aerospace components such as fuel pumps, actuators, and cockpit controls, as well as industrial systems like controllers and valves for power generation and distribution. Significant partnerships with major aerospace and industrial companies, as well as long-term contracts for maintenance and support services, also contribute to Woodward's earnings. The company benefits from the ongoing demand for energy-efficient solutions and the need for innovative technologies in both new and existing energy management systems.

Woodward Financial Statement Overview

Summary

Woodward demonstrates strong financial health with impressive revenue and profit growth, solid profitability margins, and a stable balance sheet. The company effectively manages leverage and generates healthy cash flows, positioning it well in the competitive Aerospace & Defense industry.

Income Statement

Very Positive

Woodward's income statement shows strong profitability and growth. The Gross Profit Margin is healthy, reflecting efficient cost management. The Net Profit Margin indicates solid bottom-line performance. Revenue Growth Rate has been impressive, showing significant year-over-year growth. Both EBIT and EBITDA Margins are robust, highlighting operational efficiency.

Balance Sheet

Positive

The balance sheet indicates a stable financial position. The Debt-to-Equity Ratio is moderate, suggesting manageable leverage levels. Return on Equity is strong, demonstrating effective use of equity capital. The Equity Ratio is healthy, indicating a solid equity base relative to assets, though some attention to debt levels is advisable.

Cash Flow

Positive

Cash flow metrics show a positive trend. Free Cash Flow Growth Rate is robust, highlighting improved cash generation. The Operating Cash Flow to Net Income Ratio suggests good cash generation from operations, while the Free Cash Flow to Net Income Ratio confirms efficient conversion of net income into cash.

TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Breakdown
Income Statement		Total Revenue
3.31B	3.32B	2.91B	2.38B	2.25B	2.50B
	Gross Profit
861.76M	876.48M	677.58M	525.30M	551.06M	640.24M
	EBIT
304.18M	428.30M	304.71M	110.39M	155.56M	216.17M
	EBITDA
569.41M	618.10M	443.35M	231.02M	285.09M	424.72M
	Net Income Common Stockholders
370.02M	372.97M	232.37M	171.70M	208.65M	240.40M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
72.56M	282.27M	137.45M	107.84M	448.46M	153.27M
	Total Assets
1.60B	4.37B	4.01B	3.81B	4.09B	3.90B
	Total Debt
463.66M	302.72M	742.21M	777.42M	734.85M	838.48M
	Net Debt
391.10M	20.45M	604.76M	669.57M	286.39M	685.21M
	Total Liabilities
854.88M	2.19B	1.94B	1.91B	1.88B	1.91B
	Stockholders Equity
741.12M	2.18B	2.07B	1.90B	2.21B	1.99B
Cash Flow		Free Cash Flow
338.77M	342.81M	232.04M	140.77M	426.98M	302.40M
	Operating Cash Flow
426.82M	439.09M	308.54M	193.64M	464.67M	349.49M
	Investing Cash Flow
-79.54M	-89.22M	-73.55M	-65.45M	-35.30M	-6.88M
	Financing Cash Flow
-190.57M	-218.05M	-196.47M	-442.38M	-136.32M	-290.24M

Woodward Technical Analysis

Technical Analysis Sentiment

Positive

Last Price181.87

Price Trends

50DMA

179.64

Positive

100DMA

180.14

Positive

200DMA

173.32

Positive

Market Momentum

MACD

-1.44

Negative

RSI

56.18

Neutral

STOCH

90.25

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WWD, the sentiment is Positive. The current price of 181.87 is above the 20-day moving average (MA) of 172.58, above the 50-day MA of 179.64, and above the 200-day MA of 173.32, indicating a bullish trend. The MACD of -1.44 indicates Negative momentum. The RSI at 56.18 is Neutral, neither overbought nor oversold. The STOCH value of 90.25 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WWD.

Woodward Risk Analysis

Woodward disclosed 28 risk factors in its most recent earnings report. Woodward reported the most risks in the “Production” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Woodward Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BWXT	77 Outperform	$9.86B	35.16	28.00%	0.93%	8.31%	14.74%
DRS	76 Outperform	$9.77B	46.14	8.73%	0.24%	14.44%	26.36%
WWD	73 Outperform	$10.80B	30.29	16.82%	0.57%	7.38%	26.61%
CW	73 Outperform	$12.65B	31.79	16.95%	0.25%	9.69%	14.65%
TXT	73 Outperform	$11.99B	15.25	11.70%	0.12%	0.57%	-5.62%
SARO	63 Neutral	$8.78B	823.20		―	14.77%	―
Sector *	63 Neutral	$4.28B	11.33	5.43%	214.88%	4.12%	-8.65%

* Industrials Sector Average

Performance Comparison

WWD

Woodward

181.87

32.17

21.49%

Curtiss-Wright

338.28

84.94

33.53%

DRS

Leonardo Drs

37.25

15.64

72.37%

TXT

Textron

68.42

-18.00

-20.83%

BWXT

BWX Technologies

108.97

13.90

14.62%

SARO

StandardAero, Inc.

26.48

-6.49

-19.68%

Woodward Earnings Call Summary

Earnings Call Date: Feb 3, 2025 | % Change Since: -3.06% | Next Earnings Date: Apr 28, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed picture with noteworthy achievements in aerospace and core industrial growth, operational improvements, and strategic acquisitions. However, these were offset by significant challenges such as the decline in China on-highway sales, overall decrease in net sales and earnings, and the impact of the Boeing work stoppage.

Highlights

Aerospace Segment Growth

The Aerospace segment sales increased by 7% to $494 million, with commercial aftermarket up 19%, defense OEM up 21%, and defense aftermarket up 8%.

Core Industrial Growth

Core industrial sales, excluding China on-highway, were up 7%, driven by strength in marine transportation, power generation, and oil and gas markets.

Operational Improvements

Operational improvements and lean transformation efforts have led to better productivity and cost efficiency, contributing to stable operations and improved margins.

Strategic Acquisitions

Woodward signed a definitive agreement to acquire Safran Electronics & Defense electromechanical actuation business, enhancing technology offerings and increasing content on the Airbus A350.

Strong Aftermarket Performance

Commercial aftermarket activity remains healthy, driven by high utilization rates and shop visit rates of legacy aircraft and engines.

Lowlights

China On-Highway Sales Decline

Transportation sales were down 33% due to a $65 million year-over-year decline in China on-highway sales, influenced by local economic challenges.

Net Sales and Earnings Decline

Net sales for Q1 2025 decreased by 2% to $773 million, and earnings per share were down from $1.46 to $1.42 year-over-year.

Boeing Work Stoppage Impact

Commercial OEM sales were down 10% due to the impact from the Boeing work stoppage, affecting overall sales performance.

Company Guidance

In the first quarter of fiscal year 2025, Woodward Incorporated reaffirmed its guidance despite a 2% decrease in net sales to $773 million, with adjusted earnings per share narrowing to a range of $5.85 to $6.25. The Aerospace segment showed a 7% increase in sales to $494 million, driven by a 19% rise in commercial aftermarket and a 21% growth in defense OEM sales, although commercial OEM sales decreased by 10% due to a Boeing work stoppage. Aerospace segment earnings improved to $95 million or 19.2% of sales, aided by price realization. The Industrial segment experienced a 15% drop in sales to $279 million, mainly due to a 33% decline in China on-highway sales, while core industrial sales grew by 7%. Industrial segment earnings fell to $40 million or 14.4% of sales, impacted by lower China volumes. The company maintained a debt leverage of 1.5 times EBITDA and plans to return approximately $215 million to stockholders in 2025.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.