Woodward (WWD): 3 Reasons Why This Stock Stands Out to Us

Woodward’s Recent Surge: What Investors Should Know

Woodward has experienced a remarkable upswing, with its share price climbing 60.8% over the past half-year to reach $385.99. This impressive rally has been fueled in part by robust quarterly earnings, prompting many investors to consider their next move.

Is it still wise to invest in WWD at this stage, or is the stock’s momentum primarily driven by investor excitement?

Why We’re Optimistic About Woodward

Founded in the early 20th century with a focus on water wheel controls, Woodward (NASDAQ: WWD) has evolved into a leader in designing, servicing, and manufacturing advanced energy control and optimization systems.

1. Impressive Long-Term Revenue Expansion

Assessing a company’s performance over several years offers valuable insight into its underlying strength. While any business can deliver strong results for a short period, sustained growth is a hallmark of quality. Over the past five years, Woodward’s revenue has increased at a compounded annual rate of 10.4%, outpacing the average for industrial companies and demonstrating strong customer demand for its products.

Woodward Quarterly Revenue

2. Rising Profit Margins and Improved Earnings

Operating margin is a key indicator of profitability, reflecting the percentage of revenue remaining after covering core expenses such as production, marketing, and payroll. This metric is especially useful for comparing companies with varying debt and tax obligations, as it excludes interest and taxes.

Woodward’s operating margin has increased by 4.3 percentage points over the last five years, benefiting from the leverage provided by its revenue growth. For the most recent twelve months, the company reported an operating margin of 14.5%.

Woodward Trailing 12-Month Operating Margin (GAAP)

3. Exceptional Growth in Earnings Per Share

Tracking changes in earnings per share (EPS) over time reveals whether a company’s additional sales are translating into real profitability, rather than being offset by excessive spending.

Woodward’s EPS has grown at a compounded annual rate of 17.4% over the past five years, outpacing its revenue growth. This indicates that the company has become more efficient and profitable on a per-share basis as it has expanded.

Woodward Trailing 12-Month EPS (GAAP)

Our Takeaway

These factors highlight why we view Woodward as a standout business. Following its recent rally, the stock is now trading at a forward P/E of 43.6 (or $385.99 per share). Should you consider investing now?

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