Defense parts and energy control systems manufacturer Woodward broke out after posting record results for 2024 and hiked its guidance. Meanwhile, other defense stocks looked to rebound after taking social media fire from Elon Musk.
Woodward on Tuesday topped Q4 forecasts with adjusted earnings of $1.41 per share on 10% revenue growth to $855 million. FactSet expected $1.26 per share on $810 million in revenue.
The fourth-quarter report capped a record year for the company. Woodward's 2024 earnings increased 45% to $6.11 per share while sales increased 14% to $3.32 billion, both company records.
FactSet expected full-year earnings of $5.97 per share on $3.28 billion in revenue.
Free cash flow popped 48% for the year, with 42% growth in cash flow from operations.
CEO Chip Blankenship noted its aerospace business saw increased commercial and defense OEM sales due to capacity improvements. Meanwhile, commercial and defense aftermarket sales rose due to high aircraft utilization.
Blankenship expects aerospace revenue growth and margin expansion in 2025, driven by continued strength in commercial markets and increased defense activity.
Woodward guided 2025 earnings to range from $5.75 to $6.25 per share, with the midpoint above analyst views for $5.89 per share. The midpoint of its sales forecast for $3.3 billion to $3.5 billion in revenue is also ahead of FactSet expectations for $3.39 billion.
Woodward guided aerospace sales to increase 6% to 13% for the year, with 7% to 11% sales growth in its industrial business.
Woodward Stock
WWD stock pared gains to 4.5% Tuesday. The stock rallied more than 10% in early trade, scoring a breakaway gap break out.
Shares also opened well above a 180.14 handle buy point.
Woodward stock is up almost 38% this year.
Musk Takes Aim At F-35
Elsewhere, Lockheed Martin, the primary manufacturer for the F-35, as well as contractors Northrop Grumman and RTX continued to dip early Tuesday after retreating Monday.
Tesla CEO Elon Musk, co-head of President-elect Donald Trump's Department of Government Efficiency, ridiculed F-35 fighter jets on his social media site X on Sunday.
Musk shared a video of autonomous, coordinated drone swarms, writing, "Meanwhile, some idiots are still building manned fighter jets like the F-35."
In a separate post on Monday, Musk continued, "And manned fighter jets are obsolete in the age of drones anyway. Will just get pilots killed."
However, defense experts and military leadership disagree with Musk's assessment. They contend that drones and fighter jets fulfill different mission roles.
Drones are primarily utilized for short to medium-ranged engagements. Their much lighter payload capacity means they are better-equipped for surveillance or smaller targets.
Modern fighter jets fill "irreplaceable roles," Richard Aboulafia, managing director of consulting firm AeroDynamic Advisory told Barron's. Aboulafia added that drones can't intercept enemy bombers or launch to support operations and objectives from thousands of miles away.
And Bernstein analyst Douglas Harned still expects defense stocks to do well under Trump.
"We expect Trump to seek a strong defense as he did in his first term, even if he seeks to avoid involvement in overseas conflicts," Harned wrote in a Nov. 25 report.
Still, Musk's new non-government role is expected to give him some influence in budget cuts. So his comments have a major impact on stocks.
LMT stock eased a fraction Tuesday, adding to its 3.8% decline Monday.
RTX stock climbed 1.7% after sliding 1.8% to start the week.
Northrop Grumman shares rose less than 1%, following its 2.3% drop Monday.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
