Why Is Woodward (WWD) Up 3.9% Since Last Earnings Report?

It has been about a month since the last earnings report for Woodward (WWD). Shares have added about 3.9% in that time frame, outperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Woodward due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important drivers.

Woodward's Q1 Earnings Beat Estimates

Woodward reported first-quarter fiscal 2026 adjusted net earnings per share (EPS) of $2.17, which jumped 60.7% year over year and beat the Zacks Consensus Estimate by 31.5%.

Quarterly net sales increased 29% year over year to $996 million. The upside is fueled by market tailwinds across Aerospace and Industrial. The top line beat the consensus estimate by 10.1%.

Management highlighted that the company delivered a strong first-quarter 2026 performance that exceeded expectations, reflecting broad-based year-over-year growth across both segments, driven by strong demand and disciplined execution by our global teams. In Aerospace, margin expansion was supported by a richer mix of commercial services activity and robust defense OEM demand, while Industrial results benefited from strength in power generation, transportation and oil and gas markets.

The company’s continued focus on operational excellence is driving productivity gains and more consistent execution across the portfolio. Building on this strong start to the year, WWD raised its full-year sales and earnings guidance.

Segment Results

Aerospace: Net sales were $635 million, up 29% year over year, driven by broad-based strength across commercial services, commercial OEM and defense OEM. Defense OEM and defense services sales were up 23% and 1%, respectively, year over year. Commercial OEM sales were up 22% year over year, while services jumped 50%.

Segmental earnings were $148 million, up from $95 million a year ago. The gains were fueled by effective price realization, a more favorable product mix and higher sales volumes, though partly tempered by planned investments in Aerospace manufacturing and ongoing inflationary pressures. Margins expanded 420 basis points (bps) to 23.4%.

Industrial: Net sales totaled $362 million, up 30% year over year, driven by gains across transportation, power generation and oil & gas markets. Core industrial sales, excluding the China on-highway impact, rose 22%.

Transportation sales rose 55%, and oil and gas sales increased 28%. Power generation grew a modest 7%, reflecting the sale of the combustion business in the prior year. Without that divestiture, power generation sales would have grown in the mid-20s on a percentage basis.

Segmental earnings were $67 million, up from $40 million in the year-ago quarter. In the core industrial segment, margins increased 410 bps to 18.5% of sales, led by strong pricing, higher volume and favorable mix, partially offset by inflationary pressures.

Other Details

Gross margin was up 480 bps year over year to 29.3%.

Total costs and expenses were $827.3 million, up 23.3% year over year.

Adjusted EBITDA was $207.8 million compared with $134.9 million a year ago.

Cash Flow & Liquidity

As of Dec. 31, 2025, Woodward had $454.3 million in cash and cash equivalents with $457 million of long-term debt (less the current portion).

For the quarter ended Dec. 31, 2025, WWD generated $114.4 million of net cash from operating activities, increasing from $34.5 million reported in the prior-year period.

Free cash flow was $70 million compared with $1 million in the year-ago period. This uptick was driven by strong aerospace commercial services and higher China on-highway revenue within its Industrial segment. Notably, the company did not see the typical seasonal decline in demand and maintained steady production levels despite fewer working days during the quarter.

Capital expenditures reached $44 million in the first quarter, up from $34 million. The company expects capital spending to rise meaningfully over the remaining three quarters, driven primarily by the Spartanburg facility build-out and other ongoing automation initiatives.

In the quarter under review, WWD returned $146 million to its shareholders in the form of $17 million of dividends and $129 million worth of share repurchases.

Fiscal 2026 Guidance

On the back of a strong first-quarter performance, Woodward has raised its guidance for fiscal 2026. The updated outlook assumes a continued robust demand environment, supporting ongoing sales growth and additional margin expansion.

Woodward expects consolidated net sales to rise 14% to 18% compared with the previous guidance of 7% to 12%. Aerospace is projected to grow 15% to 20% compared with the earlier projection of 9% to 15%, and Industrial is anticipated to increase 11% to 14% compared with the prior expectation of 5% to 9%.

Management stated that it plans to wind down the China on-highway business by the end of fiscal 2026. Aerospace segment earnings are still expected to be 22% to 23% of segment sales. Industrial segment earnings are estimated to be 16% to 17% compared with the prior view of 14.5% to 15.5% of segment sales.

Adjusted free cash flow is still anticipated to be between $300 million and $350 million. The company continues to project free cash flow in the range of $300-$350 million.

The company raised EPS guidance to $8.2-$8.6 from the previous expectation of $7.5-$8.

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed a upward trend in estimates revision.

VGM Scores

Currently, Woodward has a average Growth Score of C, a grade with the same score on the momentum front. However, the stock has a score of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Woodward has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Woodward is part of the Zacks Aerospace - Defense Equipment industry. Over the past month, Teledyne Technologies (TDY), a stock from the same industry, has gained 7.2%. The company reported its results for the quarter ended December 2025 more than a month ago.

Teledyne reported revenues of $1.61 billion in the last reported quarter, representing a year-over-year change of +7.3%. EPS of $6.30 for the same period compares with $5.52 a year ago.

Teledyne is expected to post earnings of $5.51 per share for the current quarter, representing a year-over-year change of +11.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.6%.

Teledyne has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.

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This article originally published on Zacks Investment Research (zacks.com).

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