A month has gone by since the last earnings report for Curtiss-Wright (CW). Shares have added about 2% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.
Curtiss-Wright Corporation reported fourth-quarter adjusted earnings per share (EPS) of $3.16, which surpassed the Zacks Consensus Estimate of $2.92 by 8.2%. The bottom line improved 8.2% from the year-ago quarter’s level of $2.92.
The company reported a GAAP EPS of $3.11, up from $2.82 in the year-ago quarter.
For 2023, the company generated EPS of $9.38, up from $8.13 recorded in 2022.
Operational Performance
In the quarter under review, the company’s net sales of $785.8 million went up 3.7% year over year. Also, the top line surpassed the Zacks Consensus Estimate of $737 million by 6.6%.
For 2023, the company reported net sales worth $2.85 billion, up from $2.56 recorded in 2022.
The company reported adjusted operating income of $163.2 million in the fourth quarter, up 2.2% year over year. The operating margin contracted 30 basis points (bps) to 20.8%.
Curtiss-Wright’s total backlog at the end of the fourth quarter was $2.9 billion, in line with the previous quarter’s level.
New orders of $685 million declined 4% year over year due to unfavorable timing in its Defense markets.
Segmental Performance
Aerospace & Industrial: Sales in this segment improved 7% year over year to $238.2 million. The upside was driven by higher OEM sales of actuation, and sensors products and surface treatment services on narrowbody and widebody platforms. Also, higher revenues from the aerospace defense market supporting various fighter jet programs benefited the segment’s sales growth.
The operating income improved 7% to $44.1 million. The operating margin expanded 30 bps to 18.5%.
Defense Electronics: Sales in this segment increased 1% year over year to $239.8 million. This rise was driven by higher sales of tactical battlefield communications equipment as well as that of embedded computing equipment on the Stryker ground combat vehicle, along with favorable timing of sales of its embedded computing equipment on various helicopter programs.
The operating income declined 2% to $69 million. The operating margin contracted 90 bps to 28.8%.
Naval & Power: Sales in this segment increased 3% year over year to $307.8 million, driven by higher sales contributions from the arresting systems equipment and strong growth in industrial valve sales in the process market. Moreover, solid growth in the commercial nuclear market, supporting increased development of Advanced Small Modular Reactors (ASMRs) contributed to this unit’s top-line growth.
The segment's adjusted operating income decreased 2% to $56.8 million. The adjusted operating margin contracted 100 bps to 18.5%.
Financial Update
CW’s cash and cash equivalents as of Dec 31, 2023, were $406.9 million compared with $257 million as of Dec 31, 2022.
The long-term debt was $1,050.4 million as of Dec 31, 2023, compared with $1,051.9 million as of Dec 31, 2022.
The operating cash inflow totaled $448.1 million at the end of 2023 compared with $294.8 million a year ago.
The adjusted free cash flow at the end of 2023 was $413.4 million against adjusted free cash outflow of $295.5 million in the previous year.
2024 Guidance
Curtiss-Wright has provided its guidance for 2024. The company expects to generate GAAP earnings in the band of $10.00-$10.30 per share.
CW projects sales in the range of $2.96-$3.01 billion. The Zacks Consensus Estimate for full-year sales is pegged at $2.95 billion, lower than the company’s guided range.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
At this time, Curtiss-Wright has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Curtiss-Wright has a Zacks Rank #3 (Hold). We expect an in-line 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, Spirit Aerosystems (SPR), a stock from the same industry, has gained 2.2%. The company reported its results for the quarter ended December 2023 more than a month ago.
Spirit Aerosystems reported revenues of $1.81 billion in the last reported quarter, representing a year-over-year change of +37.3%. EPS of $0.48 for the same period compares with -$1.46 a year ago.
For the current quarter, Spirit Aerosystems is expected to post a loss of $0.21 per share, indicating a change of +87.6% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
Spirit Aerosystems has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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