Concerns about 2025 overshadow a quarterly beat.
Industrial component manufacturer Woodward (WWD -17.75%) beat expectations for the quarter, but the company is cautious about what lies up ahead.
Investors are focused on the caution, sending shares of Woodward down 17% as of 11:30 Eastern.
Big questions heading into a new fiscal year
Woodward is a manufacturer of energy conversion and control systems for the aerospace and industrial equipment industries. The company earned $1.63 per share in its fiscal third quarter (ending June 30), topping the $1.51-per-share consensus estimate. Revenue, however, came in about $5 million below expectations at $847.7 million.
The results included strong aerospace sales, and in particular higher-margin aftermarket, or spare parts, sales. But industrial growth moderated, in part due to a slowdown in demand from China.
Woodward narrowed its guidance for full fiscal year earnings to $5.80 to $6 per share, which suggests some downside risk to the $5.98-per-share Wall Street consensus.
Is Woodward a buy?
Woodward is a solid, stable business, but investors are right to wonder when momentum will build. Heading into fiscal 2025, the company faces continued China de-stocking risk on the industrial bus and engine side of the business, and real questions about aerospace.
Unlike some aerospace suppliers, who continue to see robust growth up ahead, Woodward is beginning to see customers defer delivery on some products. Demand should rebound eventually as supply chains continue to normalize and manufacturers boost production rates, but the timing is uncertain.
For now, there are other aerospace stocks that offer a lot more visibility, without some of the complications that come with Woodward. Until the clouds clear, investors should look elsewhere.
Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
