Woodward (WWD) Stock Up 23% in a Year: Will the Rally Last?

Woodward’s WWD shares have been performing well on the trading front, with a gain of 22.7% in the past year compared with 13.5% growth of the sub-industry.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 buoying the 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 18.5%.Image Source: Zacks Investment ResearchFactors Driving PerformanceWoodward’s performance is being driven by robust end-market demand and price realization, productivity and efficiency improvements. 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 aftermarket sales rose 22% in the last reported quarter driven by supply-chain stabilization and higher output. In the third quarter of fiscal 2024, net sales for the segment were $518 million, up 8% year over year. Aerospace comprised 61% of the total revenues in the last reported quarter.Revenues from the Aerospace business are expected to improve in the upcoming quarters, driven by strength in commercial markets as well as higher defense activity. For fiscal 2024, Aerospace segment revenues are anticipated to increase in the range of 12-14%, unchanged from previous guidance. Despite supply chain disruptions, management remains confident of achieving revenues within the guided range.Woodward’s Industrial business segment is gaining from solid demand for power generation and continued requirement for backup power in data centers. Higher power demand to support grid stability is another tailwind. Increasing demand for alternative fuels across the marine industry, as well as momentum in the global marine market brought on by higher utilization and rising shipbuilding rates, bode well. Within oil and gas, improving global natural gas demand, along with an encouraging outlook for domestic shale oil production as well as China and India refining and petrochemical activities, are other growth drivers.  In the last reported quarter, segmental net sales totaled $330 million, up 3% year over year attributed to higher demand across transportation and power generation markets.However, the volatile China on-highway natural gas truck market, global macroeconomic weakness and rising costs are concerns for this Zacks Rank #3 (Hold) company.Weaker demand for heavy-duty trucks in China led to higher inventory levels among customers in this quarter. This caused a decline in China on-highway orders for the fiscal fourth quarter. Sales of on-highway natural gas trucks in China were $55 million in the fiscal third quarter. Management expects further decline in the fiscal fourth quarter, with sales in the range of $10 million to $15 million. Owing to lower China on-highway deliveries, management now expects Industrial segment revenues to increase in the band of 11-13% compared with the prior guided range of 13-15%.A Look at EstimatesThe Zacks Consensus Estimate for WWD’s fiscal 2024 and 2025 earnings per share (EPS) is pegged at $5.88 and $5.96, respectively, implying a rise of 40% and 1.3%, from the prior-year actuals. The Zacks Consensus Estimate for fiscal 2024 EPS has remained unchanged in the past seven days.Woodward’s long-term earnings growth rate is pegged at 16.2%.The Zacks Consensus Estimate for WWD’s fiscal 2024 and 2025 revenues is pegged at $3.3 billion and $3.4 billion, respectively, indicating growth of 12.4% and 3.6%, from the year-ago levels.Stocks to ConsiderSome better-ranked stocks worth consideration in the broader technology space are Badger Meter BMI, Manhattan Associates MANH and ANSYS ANSS. Badger Meter and Manhattan Associates sport a Zacks Rank #1 (Strong Buy) each, while ANSYS carries a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Badger Meter’s 2024 EPS is pegged at $4.06, up 4.4% in the past 30 days. BMI’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 12.9%. The long-term earnings growth rate is 17.9%. Its shares have risen 25.9% in the past year.The Zacks Consensus Estimate for ANSS’ 2024 earnings is pegged at $9.72, up 3.7% in the past 30 days. ANSS’ earnings beat the Zacks Consensus Estimate in three of the last four quarters while missing once, with the average surprise being 4.8%. Its shares have risen 10.1% in the past year.The Zacks Consensus Estimate for MANH’s 2024 EPS is pegged at $4.26. MANH’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, with the average surprise being 26.6%. The stock has surged 35.3% in the past year.Research Chief Names "Single Best Pick to Double"From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Badger Meter, Inc. (BMI): Free Stock Analysis Report Manhattan Associates, Inc. (MANH): Free Stock Analysis Report Woodward, Inc. (WWD): Free Stock Analysis Report ANSYS, Inc. (ANSS): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks