Why is Curtiss-Wright (CW) up 6.2% since its last earnings report?

A month has passed since Curtiss-Wright’s (CW) last earnings report. Shares have risen about 6.2% in that time, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Curtiss-Wright in line for a pullback? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the company’s most recent earnings report in order to better understand the important catalysts.

Curtiss-Wright Beats Q1 earnings, boosts FY24 sales view

Curtiss-Wright Corporation reported first-quarter earnings per share (EPS) of $1.99, which surpassed the Zacks Consensus Estimate of $1.75 by 13.7%. The bottom line also improved by 34.5% compared to $1.48 in the same quarter last year.

Operational efficiency

During the quarter, the company’s net sales of $713.2 million increased 13% year-over-year. Additionally, the top line surpassed the Zacks Consensus Estimate of $665 million by 7.2%.

The company reported adjusted operating income of $100 million in the first quarter, up 23% year-over-year. Operating margin increased 110 basis points (bps) to 14%.

Curtiss-Wright’s total backlog at the end of the first quarter was $3.1 billion, an increase of 7% over the end-2023 backlog. This improvement can be attributed to higher demand from both the aerospace and defense industries and commercial markets.

New orders of $901 million increased 26% year-over-year, driven by strong demand for the company’s defense electronics and maritime defense products.

Segment efficiency

Aerospace and industrial: Sales in this segment increased 8% year over year to $219.3 million. Growth was driven by higher sales in the commercial aerospace market, supported by increased OEM sales of actuation and sensor products and surface treatment services on single-aisle and wide-body platforms. The increase in sales in this segment was also influenced by higher revenues from the air and space defense market, resulting from the increased development of propulsion systems in various fighter programs.

Operating income increased 3% to $27.5 million. However, operating margin fell 60 basis points to 12.5%.

Defense electronics: Sales in this segment increased 31% year over year to $211.7 million. This increase was driven by increased sales of embedded CW hardware in various fighter, unmanned aerial vehicle and helicopter programs. Strong demand and higher sales of tactical battlefield communications equipment, as well as increased OEM sales of avionics and electronics across various platforms also contributed to sales growth in this segment.

The story continues

Operating income increased 106% to $48.1 million. Operating margin increased 830 basis points to 22.7%.

Naval and Power: Sales in this segment increased 6% year-over-year to $282.1 million, driven by higher sales of arresting systems equipment and higher revenues from the Columbia-class submarine. Moreover, sales growth in this segment was likely driven by increased sales to the commercial nuclear replacement parts market to support the maintenance of operating reactors in the United States and Canada.

Segment operating income declined 7% to $35.2 million. Operating margin declined 180 basis points to 12.5%.

Financial update

CW’s cash and cash equivalents balance at March 31, 2024 was $338 million compared to $406.9 million at December 31, 2023.

Long-term debt was $0.96 billion as of March 31, 2024, compared to $1.05 billion as of December 31, 2023.

Total cash outflow from operations as of March 31, 2024 was $45.6 million, compared to $91.6 million of cash used a year ago.

Adjusted free cash flow at March 31, 2024 was $57.7 million, compared to adjusted free cash flow of $92.3 million in the prior year.

Guidelines 2024

Curtiss-Wright partially increased its guidance for 2024. The company now expects to generate GAAP earnings in the range of $10.10 to $10.40 per share, compared to its previously guidance range of $10.00 to $10.30 per share.

CW also raised its sales outlook, which is now expected to be in the $2.99-$3.04 billion range compared to its previous guidance of $2.96-$3.01 billion. The Zacks Consensus Estimate calls for CW’s 2024 sales of $2.99 ​​billion, which is near the low end of the company’s projected range.

The company continues to expect to generate free cash flow in the range of $415 million to $435 million in 2024.

How have estimates changed since then?

Last month, investors saw a downward trend in new estimates.

VGM results

Currently, Curtiss-Wright has a Weak Growth Score of D, although it lags slightly behind its Momentum Score with a Value of F. Plotting a somewhat similar path, the stock is given a D on the Value side, placing it in the bottom 40% for this investment strategy .

Overall, the company’s overall VGM score is F. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company are generally on a downward trend, and the magnitude of these revisions indicates a downward shift. Notably, Curtiss-Wright carries a Zacks Rank of #2 (Buy). We expect an above-average rate of return on shares in the coming months.

Industry player performance

Curtiss-Wright is part of the Zacks Aerospace – Defense Equipment industry. Over the past month, shares of Hexcel (HXL) in the same industry have gained 1.7%. More than a month ago, the company published its results for the quarter ended March 2024.

In the most recent quarter, Hexcel reported revenues of $472.3 million, representing a year-over-year change of +3.2%. EPS of $0.44 for the same period compared to $0.50 a year ago.

For the current quarter, Hexcel is expected to report earnings per share of $0.56, representing a year-over-year change of +12%. Over the past 30 days, the Zacks Consensus Estimate has moved +0.8%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Hexcel. The stock also has a VGM Rating of D.

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