Shares in industrial and aerospace control products company Woodward(NASDAQ: WWD) rose 11.6% in the week to Friday morning. The move came after impressive fiscal second-quarter earnings were released at the start of the week.
Woodward is flying on all cylinders
The company's key customers are RTX, GE Aerospace, Boeing in the aerospace industry, Rolls Royce, Caterpillar, and Weichai Westport (fuel engines) in the industrial sector. Given this cast of aerospace customers and their strong exposure to a recovering aerospace market, it's not surprising that Woodward is seeing good momentum in its sales in 2024.
However, the big surprise came from the industrial segment, where management cited an increase "in the on-highway natural gas truck business in China, as well as strong sales in power generation and price realization."
Management raised guidance in both its segments:
- The aerospace segment's full-year sales are now forecast to grow 12%-14% compared to previous guidance for 10%-14%.
- The industrial segment's full-year sales are now forecast to grow 13%-15% compared to previous guidance for 8%-10%.
- Full-year adjusted EPS is now forecast to be $5.70-$6 compared to previous guidance for $5-$5.40.
Mixed outlook
While the upgrade to expectations is excellent news, it's not clear how long the improving environment will last, at least in the industrial segment. For example, CEO Charles Blankenship said, "The mix of heavy-duty truck production in China has been trending toward natural gas engines," but "recent discussions with our customers indicate there may be a softening in demand this summer."
He did say during the earnings call that there could "potentially" be stronger demand "toward the fourth quarter of calendar 2024."
Image source: Getty Images.
It makes sense for investors to listen carefully to what management guides toward on its next earnings call, but for now, Woodward is a company running on all cylinders.
Should you invest $1,000 in Woodward right now?
Before you buy stock in Woodward, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Woodward wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
*Stock Advisor returns as of April 30, 2024
Lee Samaha has no position in any of the stocks mentioned. The Motley Fool recommends RTX and Rolls-Royce Plc. The Motley Fool has a disclosure policy.
