Investment Thesis
Woodward demonstrates solid fundamental strength with 16.1% operating margins and 18.5% net income growth significantly outpacing 7.3% revenue growth, indicating operational leverage and margin expansion. Strong balance sheet (0.18x debt/equity, 15.0x interest coverage) and positive free cash flow generation ($108.5M) support financial stability and capital deployment flexibility.
Strengths
- Net income growth (18.5% YoY) substantially exceeds revenue growth (7.3% YoY), demonstrating margin expansion and operational leverage
- Conservative leverage profile with debt/equity of 0.18x and exceptional 15.0x interest coverage ratio
- Healthy profitability with 16.1% operating margin and 12.8% net margin, showing pricing power and cost control in industrial apparatus sector
- Strong liquidity position with 1.73x current ratio and $501.2M cash relative to $453.4M long-term debt
Risks
- Moderate free cash flow margin (5.2%) indicates capital intensity; CapEx of $96.7M consumes 47% of operating cash flow
- Moderate returns on equity (10.6%) and assets (5.4%) suggest capital efficiency is adequate but not exceptional
- Revenue growth of 7.3% is modest; sustained margin expansion may be difficult if growth slows further
- High insider trading activity (17 Form 4 filings in 90 days) direction unknown; warrants monitoring for potential sell signals
Key Metrics to Watch
- Operating margin trend - sustainability of 16.1% margin or expansion potential
- Free cash flow conversion and capital expenditure as % of revenue - monitor capex intensity and FCF yield
- Revenue growth acceleration/deceleration - validate whether 7.3% growth is sustainable
- Return on equity progression - track improvement toward 12-14% range
- Operating cash flow to net income ratio - assess cash quality of earnings
Financial Metrics
Revenue
2.1B
Net Income
267.7M
EPS (Diluted)
$4.36
Free Cash Flow
108.5M
Total Assets
5.0B
Cash
501.2M
Profitability Ratios
Gross Margin
N/A
Operating Margin
16.1%
Net Margin
12.8%
ROE
10.6%
ROA
5.4%
FCF Margin
5.2%
Balance Sheet & Liquidity
Current Ratio
1.73x
Quick Ratio
1.19x
Debt/Equity
0.18x
Debt/Assets
49.2%
Interest Coverage
15.04x
Long-term Debt
453.4M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-06T16:45:17.047080 |
Data as of: 2026-03-31 |
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