Shares of Woodward, Inc. WWD hit a new 52-week high of $56.38 yesterday, eventually closing the session a tad lower at $56.10. The closing price represented a decent year-to-date return of nearly 16.0%. Average volume of shares traded over the last three months was around 330K.
This Zacks Rank #2 (Buy) company has a market cap of $3.7 billion and a long-term expected earnings growth rate of 10.3%.
Catalysts for Growth
Shares of Woodward started gaining momentum toward the end of May, after the company announced a strategic 50/50 joint venture to enhance fuel systems for large commercial aircraft engine lines of GE Aviation, a part of General Electric Company GE.
This joint venture is a win-win situation for both the companies as it looks to strengthen their business relationship and will optimize fuel system performance by leveraging the combined fuel expertise. Woodward will be the preferred supplier to the joint venture, which ensures a stable supply chain for General Electric to manage production volume growth. Per the agreement, Woodward will receive $250 million in cash.
Woodward has been investing in new technologies in order to secure fresh businesses. It is also spending on new manufacturing units and automation equipment to perk up efficiency, as the company intends to accelerate production in the latter half of the decade. In the first half of fiscal 2015, Woodward spent $64.4 million on research and development activities.
Further, the company continues to focus on diversifying its supplier mix. It has developed a strategic plan to become a systems integrator, which has increased contract flow substantially and enabled it to capture a larger market share in the wide-body commercial aircraft field. The company continues to witness strong demand with Boeing's BA 737 Max and Airbus’ A320neo nearing launch.
However, Woodward faces intense competition from a number of major competitors in the U.S. and abroad. One of them includes the Netherlands-based Sensata Technologies Holding NV ST.
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