Woodward Inc. Updates 2 New Risk Factors

Woodward, Inc. (WWD) provides control system solutions and components to the aerospace and industrial sectors. Shares of the company have climbed 11.2% over the past month.

However, the company’s recent fourth-quarter numbers fell short of expectations on both its top-line and bottom-line fronts. Revenue increased 7.3% over the prior year to $570.2 million, but lagged estimates by $26.5 million. Earnings per share at $0.82 missed consensus by $0.04.

While Woodward experienced global supply chain challenges and delayed order shipments in fiscal 2021, it expects continued improvement in most of its end markets in fiscal 2022. Nonetheless, the company also sees uncertainty and volatility around the pace of recovery to continue in fiscal 2022.

Woodward’s upcoming earnings for the first quarter are expected on January 24. Consensus estimates point to earnings per share of $0.82 for this period.

With these developments in mind, let us take a look at the changes in Woodward’s key risk factors that investors should know.

Risk Factors

According to the TipRanks Risk Factors tool, Woodward’s top risk category is Production, contributing 33% (compared to a sector average of 26%) to the total 27 risks identified. In its recent annual report, the company has added two key risk factors.

Woodward noted that in the past, it undertook restructuring activities and other actions to reduce structural costs and drive up profitability. The company may undertake such initiatives in the future as well. The risk remains that Woodward may incur higher expenses as a consequence of these initiatives, or may not realize the envisioned benefits of such actions.

The company highlighted that direct or indirect sales to U.S. government agencies and entities made up about 29% of its total sales in fiscal 2021. Any reductions, delays or changes in government spending or changes in spending allocation, or phasing out of certain aerospace and defense programs could have a negative impact on Woodward.

Hedge Fund Activity

According to TipRanks data, the Wall Street’s top hedge funds have increased holdings in Woodward by 105.3 thousand shares in the last quarter, indicating a positive hedge fund confidence signal in the stock based on activities of six hedge funds in the recent quarter.

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