Woodward, Inc. (NASDAQ:WWD) stock rose 10.79% (As on November 25, 11:35:51 AM UTC-4, Source: Google Finance) after the company reported fourth-quarter earnings that significantly exceeded analyst expectations, driven by robust aerospace performance and margin expansion. The strong performance was fueled by a 19.6% increase in Aerospace segment sales and a 10.6% rise in Industrial segment revenue. Aerospace segment earnings jumped 52.3% to $162 million, with margins expanding 520 basis points to 24.4%, while Industrial segment earnings increased 28.2% to $49 million with margins improving 200 basis points to 14.6%. In addition, within the aerospace segment, commercial services was the standout performer with 29% growth, driven by solid air traffic, high legacy aircraft utilization, and increasing maintenance, repair, and overhaul (MRO) activity. Defense OEM sales also showed remarkable strength with 38% growth, supported by strong demand for defense products and robust smart defense order activity. The company’s free cash flow for the fourth quarter increased 53.8% to $181 million, while full-year free cash flow remained relatively flat at $340 million. Woodward also completed a strategic acquisition of Safran’s North American Electromechanical Actuation business and authorized a new three-year $1.8 billion share repurchase program.

Moreover, the company has selected by Airbus to supply 12 of the 14 spoiler actuation systems for the A350, our first primary flight control system on a commercial aircraft. Further, it has broke ground on a cutting-edge facility in Spartanburg County, South Carolina. This highly automated, vertically integrated site will serve as a model for advanced precision aerospace manufacturing. The company has also completed the divestiture of the Industrial combustion product line, aligning with the portfolio optimization strategy.

WWD in the fourth quarter of FY25 has reported the adjusted earnings per share of $2.09, beating the analysts’ estimates for the adjusted earnings per share of $1.86. The company had reported the adjusted revenue growth of 16.5 percent to $995 million in the fourth quarter of FY25, beating the analysts’ estimates for revenue of $933.89 billion. The company’s gross margin improved substantially in Q4, rising from 24.3% to 27.9%, while SG&A and R&D expenses as a percentage of sales both decreased slightly, contributing to the overall margin expansion.

For fiscal 2026, Woodward projects sales growth of 7-12% and earnings per share between $7.50 and $8.00, compared to the analyst consensus of $7.86. The company expects continued margin expansion with Aerospace segment earnings projected at 22-23% of sales and Industrial segment earnings at 14.5-15.5% of sales.