Core Viewpoint - Woodward, Inc. is winding down its on-highway natural gas truck business in China as part of a strategy to optimize its Industrial segment and product portfolio [1][2]. Group 1: Business Strategy - The decision to wind down the China on-highway (OH) business aligns Woodward's Industrial portfolio with priority end-markets and long-term growth opportunities [2]. - This strategic move allows the company to realign resources and focus on delivering leading control solutions across Transportation, Power Generation, and Oil & Gas markets [2]. Group 2: Operational Impact - The wind-down will involve closing a small manufacturing facility in China and reducing a limited number of sales, engineering, and product support staff [3]. - The decision is specific to the China OH business and does not affect other segments of Woodward [3]. Group 3: Financial Performance - The China OH business has not significantly contributed to Woodward's overall financial performance consistently [4]. - In fiscal year 2025, Woodward achieved record sales and earnings, driven by strong results in its Industrial and Aerospace segments [4].

Core Viewpoint - Woodward (WWD) has received an upgrade to a Zacks Rank 1 (Strong Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][2]. Earnings Estimates and Stock Price Movement - The Zacks rating system is effective for individual investors as it reflects changes in earnings estimates, which are strongly correlated with near-term stock price movements [2][3]. - Institutional investors utilize earnings estimates to determine the fair value of stocks, leading to buying or selling actions that affect stock prices [3]. Business Improvement Indicators - The upgrade in Woodward's rating signifies an improvement in the company's underlying business, which is expected to drive the stock price higher as investors recognize this trend [4]. Importance of Earnings Estimate Revisions - Research indicates a strong correlation between earnings estimate revisions and stock movements, making it beneficial for investors to track these revisions [5]. - The Zacks Rank system effectively leverages earnings estimate revisions to classify stocks, enhancing investment decision-making [6]. Woodward's Earnings Estimates - Woodward is projected to earn $7.82 per share for the fiscal year ending September 2026, with no year-over-year change, while the Zacks Consensus Estimate has increased by 3.4% over the past three months [7]. Zacks Rating System Overview - The Zacks rating system maintains a balanced distribution of ratings, with only the top 5% of stocks receiving a "Strong Buy" rating, indicating superior earnings estimate revisions [8][9]. - Woodward's upgrade to Zacks Rank 1 places it in the top 5% of stocks covered by Zacks, suggesting potential for higher stock movement in the near term [9].

Core Insights - Major U.S. stock market indices closed positively on January 9, 2026, following December jobs data, with unemployment rate decreasing to 4.4% but job additions missing expectations [1] Group 1: Market Trends - Investors are shifting towards dividend-growth stocks due to a preference for quality and visibility amid economic uncertainty, as these stocks signal robust cash flows [2][9] - Stocks with a strong history of year-over-year dividend growth are seen as better investments for capital appreciation compared to simple dividend-paying stocks [3][6] Group 2: Characteristics of Dividend Growth Stocks - Dividend growth stocks belong to mature companies, providing a hedge against market volatility and economic uncertainty while offering downside protection through consistent payout increases [4] - These stocks typically exhibit superior fundamentals, including sustainable business models, profitability, rising cash flows, good liquidity, and strong balance sheets [5] Group 3: Selected Dividend Growth Stocks - Woodward Inc. (WWD): Expected revenue growth of 11.2% for fiscal 2026, long-term earnings growth rate of 15.20%, and annual dividend yield of 0.35% [10][11] - Cardinal Health (CAH): Projected revenue growth of 16.2% for fiscal 2026, long-term earnings growth rate of 13.90%, and annual dividend yield of 1.02% [12] - Fox Corp. (FOX): Anticipated revenue growth of 3.6% for fiscal 2027, long-term earnings growth rate of 10.10%, and annual dividend yield of 0.84% [13] - Kinross Gold (KGC): Expected revenue growth of 11% for fiscal 2026, long-term earnings growth rate of 36.5%, and annual dividend yield of 0.45% [14] - Donaldson (DCI): Projected revenue growth of 3.5% for fiscal 2026, long-term earnings growth rate of 10%, and annual dividend yield of 1.26% [15]

Market Overview - The U.S. stock market experienced a slight decline on December 26, 2025, primarily due to low trading volume following the Christmas holiday, with many institutional investors absent for the year [1] - Major indexes such as the S&P 500, Dow, and Nasdaq saw small dips, ending short winning streaks observed earlier in the week [1][9] Investment Strategy - During the holiday season, equity investors may favor dividend-growth stocks over high price-growth stocks, as companies with a consistent history of dividend increases often exhibit strong financial health [2] - Dividend-growth stocks provide a defensive hedge against economic uncertainty and market volatility, making them attractive during periods of low market activity [4] Dividend Growth Stocks - Stocks with a strong history of year-over-year dividend growth are considered healthier investments, offering greater potential for capital appreciation compared to simple dividend-paying stocks [3][6] - Five selected dividend-growth stocks include: - Woodward Inc. (WWD): Expected revenue growth of 11.1% for fiscal 2026, long-term earnings growth rate of 15.20%, and an annual dividend yield of 0.36% [10] - Enersys (ENS): Projected revenue growth of 4% for fiscal 2026, long-term earnings growth rate of 15%, and an annual dividend yield of 0.70% [11] - Donaldson (DCI): Anticipated revenue growth of 3.5% for fiscal 2026, long-term earnings growth rate of 10%, and an annual dividend yield of 1.31% [12] - Rockwell Automation (ROK): Expected revenue growth of 5.8% for fiscal 2026, long-term earnings growth rate of 12.4%, and an annual dividend yield of 1.38% [13] - Vertiv Holdings (VRT): Projected revenue growth of 27.5% for fiscal 2025, long-term earnings growth rate of 30.2%, and an annual dividend yield of 0.15% [14] Stock Selection Criteria - Stocks selected for their strong fundamentals include criteria such as: - 5-Year Historical Dividend Growth Greater Than Zero [6] - 5-Year Historical Sales Growth Greater Than Zero [7] - 5-Year Historical EPS Growth Greater Than Zero [7] - Next 3-5 Year EPS Growth Rate Greater Than Zero [7] - Price/Cash Flow Less Than Industry Median [8] - 52-Week Price Change Greater Than S&P 500 [8]

Core Insights - Harbor Mid Cap Fund reported a 4.19% return in Q3 2025, underperforming the Midcap Index which returned 8.53% due to momentum trading [1] - The fund focuses on mid-sized U.S. companies, particularly in equity securities [1] Company Highlights - Woodward, Inc. (NASDAQ:WWD) is a key holding in the Harbor Mid Cap Fund, with a one-month return of 5.27% and a 52-week gain of 83.79% [2] - As of December 24, 2025, Woodward, Inc. had a market capitalization of $18.831 billion, with shares closing at $313.87 [2] Performance Analysis - Woodward, Inc. contributed positively to the fund's performance, reporting better-than-expected earnings and revenue, along with improved margins [3] - The aerospace segment showed strong demand for defense equipment and increased maintenance activity for legacy aircraft, indicating a recovery in the commercial aerospace manufacturing industry [3] - Woodward's transition from a component supplier to a systems supplier has led to share gains and margin expansion, with future earnings visibility linked to the rebound in commercial airline manufacturing [3]

Core Insights - Woodward's Q4 fiscal 2025 adjusted net earnings per share (EPS) surged 48% year-over-year to $2.09, exceeding the Zacks Consensus Estimate by 14.2% [3] - Quarterly net sales increased 16% year-over-year to $995 million, driven by market tailwinds in Aerospace and Industrial sectors, and also beating the consensus estimate by 6.4% [4] Financial Performance - For the full fiscal year, Woodward reported net sales of $3.6 billion, a 7% increase year-over-year, with adjusted EPS rising 13% to $6.89 [4] - Gross margin improved by 360 basis points year-over-year to 27.9%, while total costs and expenses rose 11% to $835.5 million [10] Segment Results - Aerospace segment net sales reached $661 million, up 19.6% year-over-year, with defense OEM and services sales increasing by 27% and 80% respectively [6] - Industrial segment net sales totaled $334 million, a 10.6% increase year-over-year, driven by power generation and oil & gas markets [7] Strategic Developments - The company completed the acquisition of Safran's North American Electromechanical Actuation business, enhancing its technology portfolio [5] - Woodward launched a new three-year, $1.8 billion share repurchase program and divested its combustion product line to focus on high-growth verticals [5] Cash Flow and Liquidity - As of September 30, 2025, Woodward had $327.4 million in cash and cash equivalents and $457 million in long-term debt [11] - The company generated $471 million of net cash from operating activities, an increase from $439 million in the prior year [12] Fiscal 2026 Guidance - Management anticipates consolidated net sales to rise by 7% to 12% in fiscal 2026, with Aerospace projected to grow by 9% to 15% and Industrial by 5% to 9% [15] - Adjusted free cash flow is expected to be between $300 million and $350 million, with EPS projected between $7.5 and $8 [16] Market Sentiment - Estimates for Woodward have trended upward, with a consensus estimate shift of 6.17% in the past month [17] - The stock currently holds a Zacks Rank 2 (Buy), indicating expectations for above-average returns in the coming months [19]

Company Performance - ATI has returned 111.1% year-to-date, significantly outperforming the Aerospace sector, which has returned an average of 35% [4] - Woodward (WWD) is another Aerospace stock that has outperformed the sector, with a year-to-date increase of 90% [4] Earnings Estimates - The Zacks Consensus Estimate for ATI's full-year earnings has increased by 4.7% over the past quarter, indicating improving analyst sentiment [3] - Woodward's consensus EPS estimate for the current year has risen by 3.8% over the past three months [5] Industry Ranking - ATI belongs to the Aerospace - Defense Equipment industry, which includes 37 stocks and currently ranks 101 in the Zacks Industry Rank [6] - The Aerospace - Defense Equipment industry has gained an average of 33.6% year-to-date, with ATI performing better than this average [6] Sector Ranking - ATI is part of the Aerospace group, which consists of 63 companies and currently holds the 10 position in the Zacks Sector Rank [2] - The Zacks Rank system, which emphasizes earnings estimates and revisions, currently gives ATI a Zacks Rank of 2 (Buy) [3]

Core Insights - Woodward (WWD) reported net sales of $3.6 billion for Q4 fiscal 2025, reflecting a 7% year-over-year increase, and annual per-share earnings of $7.19, up from $6.01 the previous year [1] - The company returned over $238 million to shareholders through dividends and share repurchases, contributing to a 90% increase in WWD shares this year [1] - Institutional investor demand has been strong, indicating significant support for WWD stock, as evidenced by unusual trading volumes [2][3] Financial Performance - WWD has demonstrated robust sales and earnings growth, with a 3-year sales growth rate of 14.6% and a 3-year EPS growth rate of 39.5% [5] - EPS is projected to increase by 17% this year, further attracting investor interest [3] Market Dynamics - The stock has been recognized as a top-rated investment by MoneyFlows, indicating unusual buy pressure and strong fundamentals [4] - WWD has made the Outlier 20 report 17 times since 2001, with 12 occurrences in the past seven months, highlighting its strong market performance [6] Investment Outlook - Given the historical gains and strong fundamentals, WWD is considered a potential candidate for a diversified investment portfolio [7]

Company Performance - Woodward (WWD) shares have increased by 20.7% over the past month, reaching a new 52-week high of $316.56, and have gained 89.4% since the start of the year, outperforming the Zacks Aerospace sector (34.9%) and the Aerospace - Defense Equipment industry (33.1%) [1] - The company has consistently exceeded earnings expectations, reporting an EPS of $2.09 against a consensus estimate of $1.83 in its last earnings report [2] Earnings Projections - For the current fiscal year, Woodward is projected to achieve earnings of $7.82 per share on revenues of $3.96 billion, reflecting a 13.5% increase in EPS and an 11.08% increase in revenues [3] - In the next fiscal year, earnings are expected to rise to $9.13 per share on revenues of $4.25 billion, indicating a year-over-year change of 16.72% in EPS and 7.3% in revenues [3] Valuation Metrics - Woodward's current trading metrics show a P/E ratio of 40.3X for the current fiscal year, which is above the peer industry average of 37.9X, and a trailing cash flow basis P/E of 35.2X compared to the peer group's average of 30.1X [7] - The stock has a PEG ratio of 2.65, which does not place it among the top value stocks [7] Zacks Rank and Style Scores - Woodward holds a Zacks Rank of 2 (Buy) due to a favorable earnings estimate revision trend, making it a suitable choice for investors looking for stocks with strong potential [8] - The company has a Value Score of D, while its Growth and Momentum Scores are both A, resulting in a VGM Score of B [6] Industry Comparison - Astronics Corporation (ATRO), a peer in the industry, has a Zacks Rank of 1 (Strong Buy) and has also shown strong earnings performance, beating consensus estimates by 16.67% [9][10] - The Aerospace - Defense Equipment industry is currently positioned in the top 36% of all industries, suggesting favorable conditions for both Woodward and Astronics [11]

Core Insights - Woodward, Inc. (WWD) stock has increased by 85% over the past year, outperforming the Aerospace-Defense Equipment industry's growth of 30.3% and the S&P 500's growth of 15.1% [1][9] - The stock closed at $315.2, nearing its 52-week high of $316.56, and has outperformed peers like Hexcel Corporation and Axon Enterprise [2] Company Performance - Woodward's stock rally is attributed to solid operating results, earnings beats, strong guidance for 2026, and favorable market conditions in aerospace and defense [3] - The Aerospace segment saw a 19.6% year-over-year sales increase, with defense OEM and services revenue surging by 27% and 80%, respectively [4] - For fiscal 2026, WWD anticipates Aerospace revenue growth of 9%–15% and Industrial sales growth of 5%–9%, contributing to overall revenue growth of 7%–12% [5][9] Strategic Initiatives - The company is investing in technology and automation to enhance efficiency and capture new business opportunities, including a new advanced manufacturing facility in Spartanburg, SC [6][10] - Woodward is also focusing on R&D to reduce fuel consumption and emissions while divesting non-core assets [6] - A new $1.8 billion share buyback plan has been authorized, with expectations to return $650–$700 million to shareholders in fiscal 2026 [12][16] Market Position - WWD is trading at a forward price/earnings ratio of 38.81X, which is lower than the industry average of 46.23X, indicating a potentially attractive investment opportunity [14] - The company maintains a disciplined capital-allocation strategy, prioritizing reinvestment and selective M&A to support long-term growth [11]