Woodward Jumps 52% YTD: Where Will the Stock Head From Here?

Core Insights - Woodward, Inc. (WWD) stock has appreciated 52.4% year to date, outperforming the Aerospace - Defense Equipment industry and the S&P 500 composite's growth of 25% and 5.7% respectively [1] - The stock is trading above its 100-day moving average, indicating robust upward momentum and price stability, closing at $253.64, near its 52-week high of $255.69 [4] Aerospace Segment Performance - Strength in Aerospace is driving top-line expansion for Woodward, with revenues expected to improve due to strong commercial aftermarket and higher defense activity despite supply-chain challenges [5] - For fiscal 2025, Aerospace segment revenues are anticipated to increase by 8-13%, with earnings expected to be 20-21% of revenues [6] - In Q2 of fiscal 2025, net sales for the Aerospace segment increased by 12.9% year over year, driven by strong defense demand and robust commercial aftermarket sales [6][7] Industrial Segment Performance - Woodward's Industrial business is benefiting from solid demand for power generation and data center power needs, with a narrowed expected decline in revenues to 7-9% for fiscal 2025 [10] - The company remains confident in achieving core industrial margins between 14% and 15% of sales for the year [10] Strategic Developments - Woodward delivered its first MicroNet XT Advanced Gas Turbine Control System for the U.S. Navy's DDG-51 destroyers, marking a significant milestone [9] - The company has a strong capital-allocation policy, returning $61 million to shareholders in the last reported quarter through dividends and share repurchases [12] Valuation and Investment Outlook - WWD stock is trading at a forward 12-month price/earnings ratio of 35.7X, compared to the industry average of 48.83X, indicating an attractive investment opportunity [14] - The momentum in Aerospace and core Industrial segments, along with discounted valuation and shareholder returns, positions WWD as an attractive long-term investment [17]