Yahoo Finance Why Is Curtiss-Wright (CW) Up 6.2% Since Last Earnings Report?
A month has gone by since the last earnings report for Curtiss-Wright (CW). Shares have added about 6.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Curtiss-Wright due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Curtiss-Wright Beats Q1 Earnings, Hikes ’24 Sales View
Curtiss-Wright Corporation reported first-quarter earnings per share (EPS) of $1.99, which surpassed the Zacks Consensus Estimate of $1.75 by 13.7%. The bottom line also improved 34.5% from the year-ago quarter’s level of $1.48.
Operational Performance
In the quarter under review, the company’s net sales of $713.2 million went up 13% year over year. Also, the top line surpassed the Zacks Consensus Estimate of $665 million by 7.2%.
The company reported adjusted operating income of $100 million in the first quarter, up 23% year over year. The operating margin expanded 110 basis points (bps) to 14%.
Curtiss-Wright’s total backlog at the end of the first quarter was $3.1 billion, which increased by 7% from the 2023-end backlog figure. This improvement can be attributed to higher demand from both aerospace and defense, as well as commercial markets.
New orders of $901 million rose 26% year over year, driven by the strong demand for the company’s defense electronics and naval defense products.
Segmental Performance
Aerospace & Industrial: Sales in this segment improved 8% year over year to $219.3 million. The upside was driven by higher commercial aerospace market sales, backed by increased OEM sales of actuation and sensor products and surface treatment services on narrowbody and widebody platforms. Also, higher revenues from the aerospace defense market driven by increased actuation development on various fighter jet programs benefited the segment’s sales growth.
The operating income improved 3% to $27.5 million. However, the operating margin contracted 60 bps to 12.5%.
Defense Electronics: Sales in this segment increased 31% year over year to $211.7 million. This rise was driven by increased sales of CW’s embedded computing equipment on various fighter jets, unmanned aerial vehicles and helicopter programs. Also, robust demand and higher sales of tactical battlefield communications equipment, along with increased OEM sales of avionics and electronics on various platforms, have contributed to this segment’s sales growth.
The operating income increased 106% to $48.1 million. The operating margin expanded 830 bps to 22.7%.
Naval & Power: Sales in this segment increased 6% year over year to $282.1 million, driven by higher sales contributions from the arresting systems equipment and higher revenues from the Columbia-class submarine. Moreover, increased commercial nuclear aftermarket sales supporting the maintenance of operating reactors in the United States and Canada are likely to have aided this segment’s sales growth.
The segment's operating income decreased 7% to $35.2 million. The operating margin contracted 180 bps to 12.5%.
Financial Update
CW’s cash and cash equivalents as of Mar 31, 2024 were $338 million compared with $406.9 million as of Dec 31, 2023.
The long-term debt was $0.96 billion as of Mar 31, 2024 compared with $1.05 billion as of Dec 31, 2023.
The operating cash outflow totaled $45.6 million as of Mar 31, 2024 compared with $91.6 million cash used a year ago.
The adjusted free cash outflow at the end of Mar 31, 2024 was $57.7 million compared with the adjusted free cash outflow of $92.3 million in the previous year.
2024 Guidance
Curtiss-Wright has partially increased its guidance for 2024. The company now expects to generate GAAP earnings in the band of $10.10-$10.40 per share, up from its prior guided range of $10.00-$10.30 per share.
CW also increased its sales outlook, which is now expected in the range of $2.99-$3.04 billion compared to the earlier guidance in the band of $2.96-$3.01 billion. The Zacks Consensus Estimate for CW’s 2024 sales is pegged at $2.99 billion, which is almost in line with the lower end of the company’s guided range.
The company continues to expect to generate free cash flow in the range of $415-$435 million during 2024.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Curtiss-Wright has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Curtiss-Wright has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Curtiss-Wright is part of the Zacks Aerospace - Defense Equipment industry. Over the past month, Hexcel (HXL), a stock from the same industry, has gained 1.7%. The company reported its results for the quarter ended March 2024 more than a month ago.
Hexcel reported revenues of $472.3 million in the last reported quarter, representing a year-over-year change of +3.2%. EPS of $0.44 for the same period compares with $0.50 a year ago.
Hexcel is expected to post earnings of $0.56 per share for the current quarter, representing a year-over-year change of +12%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.8%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Hexcel. Also, the stock has a VGM Score of D.
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Curtiss-Wright Corporation (CW) : Free Stock Analysis Report
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