Whether you’ve flown or cranked up the AC dial, odds are Woodward was involved somehow. It’s not a household name but makes the guts that keep jets in the air and turbines spinning, including the actuators, fuel systems, and controls.
Commercial aerospace, defense and gas‑turbine power are doing the heavy lifting, and Woodward is riding the wave. Management raised full‑year 2025 EPS guidance to $6.50–$6.75 and aerospace margins are parked north of 21%.
Now flying high, Woodward stock is attracting attention so we dive in to explore why Stan Druckenmiller likely snapped up a position some time ago?
What Most People Miss
This summer, Airbus tapped Woodward to supply the A350 spoiler actuation system via 12 of the jet’s 14 spoilers.
Management is locking in recurring service revenue as those widebodies rack up hours. It’s also Woodward’s first primary flight‑control win on a commercial platform, which puts it on the short list for big future programs.
Woodward closed the purchase of Safran’s North America electromechanical actuation assets in July and the press called it “not financially material” today, but the content is exactly where you want to be thanks to A350 horizontal stabilizer trim actuation, control electronics, and customer relationships across Airbus, Embraer, Gulfstream, and Dassault.
Woodward owns 50% of a JV that supplies fuel systems for big commercial engines including ≥50,000 pounds of thrust. Beyond technology intimacy and program access, there’s a cash annuity which is that GE is paying Woodward 15 annual contingent payments of roughly $4.9 million that began in 2017.
On top of that, Woodward books equity income and receives cash distributions, such as last year’s $41.2 million and $38 million, respectively.
Yes, the China on‑highway natural‑gas truck cycle is rolling over but underneath, the “Core Industrial” bucket of power generation plus marine/oil & gas grew sales 9% and earnings 16% in the latest quarter, with margins up 90 basis points to 15.6%. The parts of Industrial that matter into 2026 are doing what you want.
Massive data centers need reliable, dispatchable power. Grids everywhere are straining. That means more gas turbines and large engines for primary and backup generation. Woodward sells the metering valves, actuators, and controls that make those machines run smoothly and efficiently.
The State of the Business
In Q3 sales hit $915 million, up 8% year over year while EPS was $1.76.
Aerospace sales rose 15% with segment margin at 21.1%. Industrial sales fell 3% with margin at 14.9% thanks to China on‑highway drag.
Year‑to‑date cash from operations is $238 million while free cash flow is $159 million, damped by working capital to support growth.
What Does The Next Year Hold?
Commercial services grew roughly 30% year over year in Q3, and defense OEM was up more than 50%. As supply chains unclog and fleets fly, high‑margin services should outgrow OEM.
Fresh awards for F‑35 engines also set a favorable backdrop for Woodward’s defense content. Management lists the F‑35 among its key programs.
Early milestones from the Safran actuation tuck‑in and progress on the A350 spoiler program give the Street tangible proof points that the content story is widening.
Expect incremental orders and backlog color as utilities and hyperscalers add dispatchable capacity.
A lower effective tax rate (guided around 17%) helps EPS optics, and the buyback/dividend combo provides a slow, steady bid.
Why the Edge Should Hold
Woodward is embedded on high‑volume commercial programs and on durable defense workhorses (F‑35, F‑15, Apache, Black Hawk). The GE Aerospace JV on large‑engine fuel systems deepens technical and commercial competitive advantages.
Winning the A350 spoiler actuation with long‑term maintenance aligned to Airbus’ Flight Hour Services is the blueprint that content that becomes recurring revenue.
No Mulligans Going Forward
Management already expects pressure thanks to a longer trough that may persist to mask strength in power generation and marine.
If aerospace OEMs re‑destock or suppliers stumble, it can push revenue and mix to the right. And don’t forget budgets are noisy and lots slip. The counter is that current F135 awards are strong.
Great businesses on premium multiples don’t get mulligans. Any execution hiccup can compress the P/E quickly.
What the Tape Is Saying
At roughly $249 per share, Woodward’s market cap is about $15.3 billion. On the mid‑point of FY25 EPS guidance ($6.625), the stock changes hands around 37.6×.
The FY25 free‑cash‑flow guide midpoint implies around a 2.2% FCF yield. Dividend yield sits near 0.45% on a $0.28 quarterly payout.
The bear case is 28× on $7.3 → ~$204 (about −18%) while bulls will estimate 35× on $7.8 → around $273 for about a 10% gain.
Near‑term upside exists, but the setup says let EPS compounding do the work. If volatility pulls the stock toward ≤30× FY26 EPS, the risk‑reward improves meaningfully without needing multiple expansion.
Margin Is Key Now
Keep an eye on aerospace margin holding ≥21% with services and defense OEM still carrying the mix. The “Core Industrial” margin line versus the China on‑highway drag is another focus point.
Defense order cadence is another are to watch, especially engine‑related shipments that flow through to Woodward’s content.
Now What?
Woodward is adding the right kind of content, mission‑critical hardware that becomes sticky service revenue, while a strong balance sheet and good capital returns cushion the downside.
At today’s premium, patience isn’t cowardice but discipline. Let execution compound, and use drawdowns toward a ~30× FY26 multiple as chances to build a position.
On clean execution, the stock can grind toward the high‑$260s to low‑$270s over the next 6–12 months.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.