Woodward, Inc. WWD reported third-quarter fiscal 2026 adjusted earnings of $2.52 per share, up 43.2% year over year. The bottom line beat the Zacks Consensus Estimate of $2.39 by 5.4%.
Net sales rose 21.2% to $1.11 billion but missed the consensus mark of $1.114 billion by 0.4%. Commercial OEM sales surged 34%, while demand remained broad across Woodward's Industrial markets.
In the past year, shares have gained 50.6% compared with the Zacks Aerospace - Defense Equipment industry’s rise of 4.8%.
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WWD's Aerospace Sales Accelerate
Aerospace sales increased 19% to $709 million. Commercial OEM revenues reached $234 million as aircraft production rates increased, while commercial services generated $268 million on continued legacy aircraft servicing and growing LEAP and GTF activity. Management said service inputs remained steady to higher across newer engine platforms.
Defense OEM sales declined 6% to $141 million because of a one-time revenue recognition adjustment. Excluding that item, sales would have grown in the mid-single digits. Defense services rose 20% to $66 million. Segment earnings advanced 35% to $170 million, and margin expanded 290 basis points (bps) to 24%. A retroactive contract pricing adjustment added about 100 bps to the margin.
Woodward's Industrial Growth Broadens
Industrial sales climbed 26% to $401 million. Transportation revenues increased 40% to $180 million, aided by strong marine demand and $40 million of China on-highway sales. Power generation rose 19% to $145 million on robust data-center demand for prime and backup power.
Oil and gas revenues advanced 11% to $76 million, supported by liquefied natural gas infrastructure activity and improving upstream capital spending.
Industrial earnings jumped 86% to $88 million, while margin expanded 720 bps to 22.1%. China on-highway contributed about 90 bps to the margin. Core Industrial sales, which exclude that business, grew 19% to $361 million.
WWD's Pricing and Productivity Support Profits
Adjusted EBITDA increased 50% to $249 million, while adjusted EBIT rose 58% to $217 million. Total costs and expenses were $916.2 million compared with $788.6 million a year earlier. Profitability benefited from higher volume and pricing, partly offset by inflation, unfavorable mix and a higher tax burden. The adjusted effective tax rate rose to 24.2% from 14.5%.
Companywide price realization was 10% in the quarter. Management expects full-year pricing of about 8%, with a more normal 3-5% range going forward. Lean initiatives are beginning to improve factory productivity. Automation across machining, inspection and material handling is intended to reduce the need for roughly 1,000 incremental hires by 2029.
Woodward, Inc. Price, Consensus and EPS Surprise
Woodward, Inc. price-consensus-eps-surprise-chart | Woodward, Inc. Quote
Woodward's Cash Flow Funds Capacity Expansion
Net cash provided by operating activities increased 17% to $147 million. Free cash flow declined 12% to $87 million as capital expenditures more than doubled to $60 million. Management expects spending to rise sharply in the fourth quarter, mainly to finish the Spartanburg facility and purchase equipment for the A350 spoiler program.
Woodward ended June with $475 million in cash and cash equivalents and $1.34 billion of total debt. EBITDA leverage was 1.6 times. Through nine months, operating cash flow reached $352 million and free cash flow totaled $196 million. The company returned $608 million to shareholders, including $553 million through repurchases and $55 million through dividends.
WWD Raises Fiscal 2026 Earnings Outlook
WWD raised its fiscal 2026 adjusted earnings guidance to $9.30-$9.50 per share from $9.15-$9.45. The company maintained its sales growth outlook of 20-23%, free cash flow forecast of $300-$350 million and capital expenditure plan of approximately $290 million. It expects to return about $700 million to shareholders for the full year.
Aerospace sales are now expected to grow 21-23%, with a segment margin of about 23.5%. Industrial sales growth is projected at 19-21%, up from 18-20%, while segment margin is expected to reach roughly 19%. The adjusted effective tax rate forecast increased to approximately 22.5%.
WWD’s Zacks Rank
Woodward currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Performance of Other Companies
Teledyne Technologies Inc. TDY reported second-quarter 2026 adjusted earnings of $6.28 per share, which surpassed the Zacks Consensus Estimate of $5.78 by 8.7%. The bottom line also improved 20.8% from $5.20 recorded in the year-ago quarter.
Total sales were $1.66 billion, which beat the Zacks Consensus Estimate of $1.57 billion by 5.9%. The top line also jumped 9.8% from $1.51 billion reported in the year-ago quarter. This improvement was driven by higher year-over-year sales across all business segments.
America Movil, S.A.B. de C.V. AMX reported net income per ADR of 47 cents for the second quarter of 2026, up from 38 cents in the prior-year quarter. The earnings figure missed the Zacks Consensus Estimate of 52 cents. Total quarterly revenues rose 3.1% to Mex$241,071 million, driven by rapid momentum across the Service and Equipment segments.
BlackBerry Limited BB reported first-quarter fiscal 2027 non-GAAP earnings per share of 4 cents. The figure beat the company’s estimate of 2-3 cents. In the year-ago quarter, it reported a non-GAAP EPS of 2 cents. The Zacks Consensus Estimate was pegged at 3 cents per share. BlackBerry generated $152.9 million in fiscal first-quarter revenue, representing 26% year-over-year growth.
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This article originally published on Zacks Investment Research (zacks.com).