Woodward (WWD) Down 2.7% Since Earnings Report: Can It Rebound?

About a month has gone by since the last earnings report for Woodward, Inc. WWD. Shares have lost about 2.7% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Woodward Surpasses Q4 Earnings and Revenue Estimates

Woodward reported fourth-quarter fiscal 2017 earnings of 98 cents per share, beating the Zacks Consensus Estimate of 90 cents by 8.9%. However, the bottom line declined 1% from the prior-year figure of 99 cents.

Full-year earnings of $3.16 per share outpaced the Zacks Consensus Estimate of $3.09 by 2.3%. The figure was also up 10.9% from the year-ago tally of $2.85 per share.

Total Revenues

The company’s quarterly net sales of $606.8 million surpassed the Zacks Consensus Estimate of $599 million by 1.3%. The top line also increased 2.7% from the year-ago figure of $590.9 million, mainly on account of growth in sales witnessed in the Aerospace segment.

Again, fiscal 2017 net sales of $2.10 billion topped the Zacks Consensus Estimate of $2.09 billion by 0.5% and were up 4% from fiscal 2016.

Operational Update

Woodward’s total costs and expenses increased 1.9% year over year to $520 million in the reported quarter. The upside was driven by higher cost of goods sold, selling, general, and administrative expenses and research and development expenses.

Quarterly Segmental Performance

Aerospace: Segment revenues were up 9.3% year over year to $399.1 million, mainly owing to strong defense and commercial programs.

Earnings came in at $85.5 million, up 6.4% on the back of higher sales volume.

Industrial: Segment revenues totaled $23 million, down 8% year over year due to continued weakness in industrial gas turbines and renewable power sales.

Additionally, the bottom line improved 19.6% to $23 million attributable to the company’s cost reduction initiatives, partially offset by the impact of the lower sales volume.

Financial Condition

Woodward’s cash and cash equivalents as of Sep 30, 2017 were $87.6 million compared with $81.1 million as of Sep 30, 2016.

Long-term debt (excluding current portion) was $580.3 million as of Sep 30, 2017, up from $577.2 million as of Sep 30, 2016.

Free cash inflow was $95.1 million in the fiscal fourth quarter compared with $73.2 million in the year-ago quarter.

In fiscal 2017, net cash generated from operating activities was $307.5 million compared with $435.4 million in the prior-year quarter. Also, payments for property, plant and equipment were $92.3 million compared with $175.7 million in fiscal 2016.

Fiscal 2018 Guidance

Woodward expects net sales in the $2.2-$2.3 billion range. Earnings are anticipated in the band of $3.20-$3.50 per share.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last month as none of them issued any earnings estimate revisions.

Woodward, Inc. Price and Consensus

 

Woodward, Inc. Price and Consensus | Woodward, Inc. Quote

VGM Scores

Currently, Woodward's stock has a nice Growth Score of B, though it is lagging a lot on the momentum front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

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.

Zacks' style scores indicate that the company's stock is suitable for value and growth investors.

Outlook

Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.

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