Woodward, Inc WWD is scheduled to report first-quarter fiscal 2025 results on Feb. 3.
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The Zacks Consensus Estimate for revenues is pegged at $778.5 million, which implies a decline of 1.1% from the year-ago reported number. The consensus mark for earnings is pegged at $1.14 per share, indicating a year-over-year decline of 21.4%.
WWD’s earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 21.2%. Woodward’s shares have gained 34.9% compared with the sub-industry’s growth of 34.1% in the past year.
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Factors to Note Ahead of WWD’s Q1 Results
WWD’s performance in the fiscal first quarter is likely to have been powered by growth in the Aerospace segment, indicating its strategic positioning coupled with operational excellence.
Higher defense activity and momentum in commercial OEM and commercial aftermarket sales, driven by increased passenger traffic, aircraft utilization and price realization, are likely to have cushioned the segment’s performance. Defense aftermarket sales have been benefiting from supply-chain stabilization. Defense OEM sales are likely to have been driven by higher guided weapons and ground vehicles sales.
The Industrial segment is anticipated to have benefited from increasing demand for power generation and the continued requirement for backup power for data centers. Higher power demand to support grid stability is a 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, bodes well.
Within oil and gas, an encouraging investment outlook in China, Middle East and India’s refining and petrochemical activities are likely to have acted as another tailwind.
Volatile China on-highway natural gas truck market, global macroeconomic weakness and rising costs are concerns.
Woodward, Inc. Price and EPS Surprise
Woodward, Inc. price-eps-surprise | Woodward, Inc. Quote
Weaker demand for heavy-duty trucks in China in the last reported quarter led to higher inventory levels at customers. This caused a decline in China on-highway orders for the fiscal fourth quarter. Sales for on-highway natural gas trucks in China were $22 million in the fiscal fourth quarter.
Management expects a further decline in the fiscal first quarter of 2025, due to weak local economic health and a narrowing fuel price spread. Sales from this business are expected to be $5 million in the fiscal first quarter.
Also, indications of a slowdown in overall demand within the oil and gas sector and persisting supply-chain challenges in the Aerospace segment remain as concerns.
We expect revenues from the Aerospace segment to be up 8.9% to $501.7 million and the Industrial segment to decline 14.6% to $278.3 million for the fiscal first quarter.
Recent Developments of WWD
On Dec. 20, 2024, Woodward signed a definitive agreement to acquire Safran Electronics & Defense’s electromechanical actuation business located in the United States, Mexico and Canada. This move will include obtaining intellectual property, operational assets, skilled talent and long-term customer agreements related to Horizontal Stabilizer Trim Actuation systems. These systems play a critical role in aircraft stabilization, ensuring safe and efficient flight operations with notable applications like the Airbus A350.
On Nov. 18, 2024, Woodward inked a definitive agreement to sell its heavy-duty gas turbines combustion parts business, based in Greenville, SC, to GE Vernova. The deal marked a significant development in the energy and aerospace sectors, aiming to bolster GE Vernova’s operational capabilities while enabling Woodward to focus on its core growth areas.
Furthermore, the company has emphasized the importance of a seamless transition for its Greenville workforce. The agreement indicates the company’s dedication to its employees, ensuring they have opportunities to continue working under GE Vernova’s ownership. This transaction is anticipated to settle in early 2025, pending the fulfillment of customary closing conditions.
What Our Model Says for WWD
Our proven model does not predict an earnings beat for WWD this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here.
WWD has an Earnings ESP of -0.79% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are three stocks you may want to consider, as our model shows that these have the right elements to post an earnings beat in this reporting cycle.
QUALCOMM Incorporated QCOM currently has an Earnings ESP of +3.34% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
QCOM is scheduled to report quarterly earnings on Feb. 5. The Zacks Consensus Estimate for QCOM’s to-be-reported quarter’s earnings and revenues is pegged at $2.93 per share and $10.92 billion, respectively. Shares of QCOM have gained 15.8% in the past year.
O’Reilly Automotive, Inc. ORLY presently has an Earnings ESP of +6.71% and a Zacks Rank #2. ORLY is scheduled to report quarterly numbers on Feb. 5. The Zacks Consensus Estimate for ORLY’s to-be-reported quarter’s earnings and revenues is pegged at $9.84 per share and $4.03 billion, respectively. Shares of ORLY have risen 28.1% in the past year.
Amazon.com, Inc. AMZN has an Earnings ESP of +4.78% and a Zacks Rank #2 at present. AMZN is scheduled to report quarterly figures on Feb. 6. The Zacks Consensus Estimate for AMZN’s to-be-reported quarter’s earnings and revenues is pegged at $1.52 per share and $187.28 billion, respectively. Shares of AMZN have increased 51.2% in the past year
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Woodward, Inc. (WWD) : Free Stock Analysis Report