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

Woodward, Inc. WWD stock has appreciated 52.4% year to date (“YTD”), outpacing the Aerospace -Defense Equipment industry and the S&P 500 composite’s growth of 25% and 5.7%, respectively.

Price Performance of WWD

The stock is trading above its 100-day moving average, indicating robust upward momentum and price stability. Closing at $253.64 as of yesterday’s trading session, WWD stock is currently hovering near its 52-week high of $255.69, attained on July 8, 2025.

The sharp rally is bound to raise a familiar question, if the stock still has room to run? Let us deep dive into WWD’s pros and cons and ascertain the best action for your portfolio.

Several Tailwinds Favor WWD’s Prospects

Strength in Aerospace is driving top-line expansion for Woodward, along with the core industrial segment. Revenues from Woodward’s Aerospace business are expected to improve in the upcoming quarters, driven by strength in the commercial aftermarket as well as higher defense activity, despite supply-chain challenges. Geopolitical developments have been driving demand for defense products and the company expects strong growth across its defense portfolio, including a considerable increase in smart defense. 

For fiscal 2025, Aerospace segment revenues are anticipated to increase in the range of 8-13% compared with 6-13% predicted earlier, whereas its earnings (as percentage of revenues) are still expected to be 20-21%. In the second quarter of fiscal 2025, net sales for the segment were up 12.9% year over year, fueled by strong defense demand and a robust commercial after-market, partially offset by softer commercial OEM and defense after-market sales. Defense OEM sales increased 52%, driven by strong demand for smart defense programs. Commercial after-market sales grew 23%, supported by both higher pricing and volume. 

Woodward’s Industrial business segment has been gaining from solid demand for power generation and continued requirement for primary and backup power for data centers. Higher investment in gas-powered generation to support grid stability is another tailwind. Increasing demand for alternative fuels across the marine industry, as well as momentum in the global marine market brought on by higher utilization, bodes well. Within oil and gas, an encouraging investment outlook in China, the Middle East and India’s refining and petrochemical activities are other growth drivers. 

Woodward, Inc. Price, Consensus and EPS Surprise

Woodward, Inc. price-consensus-eps-surprise-chart | Woodward, Inc. Quote

Woodward marked a milestone in the second quarter of fiscal 2025 with the delivery of its first MicroNet XT Advanced Gas Turbine Control System for the U.S. Navy's DDG-51 destroyers, under a contract covering 30 units through 2027 and scaling up to 135 in 10-15 years. The next upgrade phase will add redundancy for propulsion systems, with low-rate production planned from 2026 to 2029.

Owing to strong demand momentum, for fiscal 2025, the expected decline in Industrial segment’s revenues has been narrowed to a more favorable range of 7-9% compared with the earlier projection of 7-11%. The company remains confident in achieving core industrial margins between 14% and 15% of sales for the year. 

Nonetheless, volatile China on-highway natural-gas truck market, global macroeconomic weakness and rising costs are concerns. In the fiscal second quarter, China’s on-highway sales totaled $21 million, down from $45 million a year ago. Transportation sales declined 18% due to the anticipated drop in China’s on-highway sales. Industrial segment’s earnings were mainly affected by the lower China on-highway volume. Management earlier announced that it expects full-year revenues from China’s on-highway natural-gas trucks to be $40 million for the year, indicating a significant decline from $175 million in fiscal 2024. There is no update for the same on the latest earnings call.

WWD’s Healthy Capital Deployment Strategy

The company’s strong capital-allocation policy bodes well as this enables it to fund strategic initiatives like innovation and acquisitions, and boost capital returns. In the last reported quarter, Woodward returned $61 million to its shareholders in the form of $17 million of dividends and $44 million worth of share repurchases. In the first half of fiscal 2025, total returns to stockholders reached $111 million, including $79 million in share repurchases. 

The company remains on track to achieve its 2025 goal of returning approximately $215 million to stockholders, including $150 million in share repurchases and $65 million in dividends. Currently, $130 million remains available under its $600 million stock repurchase authorization.

WWD also hiked its quarterly dividend by 12% to 28 cents per share in February 2025.

WWD Trades at a Discount

WWD stock is trading at a discount, with forward 12-month price/earnings of 35.7X compared with the industry’s 48.83X, making it an attractive investment opportunity.

How to Strategize Investment in WWD Stock?

WWD’s momentum in Aerospace and core Industrial segments, along with discounted valuation and shareholder returns, makes it an attractive investment for the long term.

It currently carries a Zacks Rank #2 (Buy).

Other Stocks to Consider

Some other top-ranked stocks worth consideration from the broader aerospace sector are HEICO Corporation HEI, Curtiss-Wright Corporation CW and AAR Corp. AIR. While HEICO sports a Zacks Rank #1 (Strong Buy), CW and AIR carry a Zacks Rank #2 each. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for HEICO’s fiscal 2025 EPS is pegged at $4.57, up 3 cents in the past seven days. The long-term EPS growth rate for HEI is 17.6%. HEICO’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 11.87%. Its shares have gained 34.4% year to date. 

The Zacks Consensus Estimate for CW’s 2025 earnings is pegged at $12.71 per share, improved 1 cent in the past seven days. Curtiss-Wright’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 13.34%. The stock has gained 35.8% year to date. 

The Zacks Consensus Estimate for AIR’s fiscal 2025 EPS is pegged at $3.75, unchanged in the past seven days. AAR Corp’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 4.39%. The stock has appreciated 22.2% year to date. 

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This article originally published on Zacks Investment Research (zacks.com).

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