Yahoo Finance Woodward (WWD) Stock Up 35.5% YTD: Will the Rally Last?
Woodward Inc. WWD shares have been performing well on the trading front, with a gain of 35.5% year to date compared with 15% and 12.3% growth of the S&P 500 composite and the sub-industry, respectively.
With healthy fundamentals and strong growth opportunities, this Zacks Rank #1 (Strong Buy) stock appears to be a solid investment option at the moment.
The Zacks Consensus Estimate for the bottom line has been moving northward since the last earnings announcement, reflecting analysts’ optimism.
The Zacks Consensus Estimate for WWD’s fiscal 2024 and 2025 earnings per share (EPS) is pegged at $5.88 and $6.25, implying a rise of 39.7% and 6.3%, respectively, from the prior-year actuals.
The Zacks Consensus Estimate for fiscal 2024 and 2025 EPS has increased 11.4% and 8.1%, respectively, in the past 60 days, reflecting analysts’ optimism.
Woodward’s long-term earnings growth rate is pegged at 16.5%.
The Zacks Consensus Estimate for WWD’s fiscal 2024 and 2025 revenues is pegged at $3.3 billion and $3.48 billion, indicating growth of 13.3% and 5.4%, respectively, from the year-ago levels.
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Growth Catalysts
WWD 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.
Solid financial performance is driving a good run on the trading front. The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters with an average surprise of 26.1%.
Strong end-market demand, price realization, productivity and efficiency improvements are driving overall performance. WWD serves the aerospace and energy markets through two reportable segments: Aerospace and Industrial.
The Aerospace segment benefits from higher commercial OEM and commercial aftermarket sales attributed to improving passenger traffic and aircraft utilization. Defense OEM sales also improved on the back of higher ground vehicles. Defense aftermarket sales benefited from supply-chain stabilization and higher output. In the last reported quarter, Aerospace comprised 59.6% of the total revenues.
The Aerospace segment’s 2024 revenues are now expected to increase in the range of 12-14% compared with the previous guided range of 10-14%.
Woodward’s Industrial business segment is gaining from solid demand for power generation, especially in Asia, and continued requirement for backup power for data centers. Higher demand for alternative fuels across the marine industry, momentum in the global marine market brought on by higher utilization and rising shipbuilding rates are other tailwinds. In the last reported quarter, this segment comprised 40.4% of the total revenues.
For fiscal 2024, the Industrial segment revenues are expected to increase in the range of 13-15% compared with the prior guided range of 8-10%.
Headwinds Persist
With the recent pause by the U.S. government for further LNG export approvals has made the investment scenario of the LNG development market uncertain. Weakness in guided weapons sales is an added headwind.
Further, the volatile China on-highway natural gas truck market, global macroeconomic weakness and rising costs are concerns. Sales for on-highway natural gas trucks in China were $65 million in the second quarter. However, management expects sales in the fiscal third quarter between $35 million and $40 million.
Other Stocks to Consider
Some other top-ranked stocks worth consideration in the broader technology space are Alphabet GOOGL, Arista Networks ANET and Badger Meter Inc (BMI), currently sporting a Zacks Rank #1 each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Alphabet’s 2024 EPS is pegged at $7.60, up 12.1% in the past 60 days. GOOGL’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 11.3%. The long-term earnings growth rate is 17.5%. Shares of GOOGL have risen 43.5% in the past year.
The Zacks Consensus Estimate for Arista Network’s 2024 EPS is pegged at $7.92, up 5.7% in the past 60 days. The long-term earnings growth rate is 15.7%. ANET’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 15.4%. Shares of ANET have gained 115.5% in the past year.
The Zacks Consensus Estimate for Badger Meter’s 2024 EPS has increased 4.9% in the past 60 days to $3.89. BMI earnings beat the Zacks Consensus Estimate in the last four quarters, the average surprise being 12.7%. The long-term earnings growth rate is 15.6%. Shares of BMI have risen 26.4% in the past year.
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