WOODWARD, INC. (WWD): what the price requires

At today's price, WOODWARD, INC. (WWD) is priced for today's economics sustained for ~9.9 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/WWD

Headline

FieldValue
TickerWWD
CompanyWOODWARD, INC.
Current price$395.81/sh
CompositionAerospace 65% / Industrial 35%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed11.5%
Operating margin today15.3%
Margin compression implied-3.8pp
Must persist for9.9y
Multiple paid41x operating income

The operating-margin requirement is derived from the framework's value band at year 11, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 10.1% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2 years.

How unusual the bet is: high

ReferenceValue
vs own history+1.55σ
cohort percentile (of 225 peers)84
sustained it ~9.9 years at this level15%
implied end-window share0%

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset3.73x4expensive
Earnings5.56x4expensive
Relative1.89x4expensive
Growth0.91x3justifies

Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.9%); the inversion above states its own rate.

Per-Model Detail (n=15)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$238.191.66xyesFCF base $0.5B, growth 19% (input: historical growth), terminal g 4.0%, WACC 8.9%, 6yr projection
DCF Exit MultipleGrowth$447.150.89xyesExit EV/EBITDA: 199.2x / 201.2x / 203.2x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative$155.522.55xyesP/E 26.76x (blended: static sector reference 18x + trailing (TTM) 47x), scenarios: 21.9x / 26.8x / 31.6x (bear / base = reference held flat / bull), EV/EBITDA 26.4x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$90.654.37xyesBV/sh $41.21, ROE (TTM) 20.3%, ke 9.3%
Two-Stage Excess ReturnAsset$133.152.97xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$436.190.91xyesRev $4.0B, growth 19% (input: historical growth; tapered), Terminal P/S: 5.0x / 6.1x / 7.2x (bear / base = today's held flat / bull, cap 12x)
Peter Lynch Fair ValueRelative$292.251.35xyesEPS $8.35, growth 35% (input: historical EPS growth), PEG=1.35 (Fair)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings——no—
Residual IncomeAsset$128.163.09xyesBV $41.21 + 5yr PV of (ROE (TTM) 20.3% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham NumberAsset$88.004.50xyes√(22.5 × EPS $8.35 × BVPS $41.21) — Graham's conservative floor
EV/EBITDA RelativeRelative$14.4127.47xyesEBITDA $0.12B × sector EV/EBITDA 12.0x (excluded from median)
FCF YieldEarnings$58.766.74xyesFCF $388.6M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$52.877.49xyesSBC-adj FCF $0.36B (FCF $0.39B − SBC $0.03B) capitalized at Kₑ
Ben Graham FormulaEarnings$269.431.47xyesEPS $8.35 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative$163.102.43xyesRevenue $4.00B × sector P/S 2.5x
PEG Fair ValueRelative$313.131.26xyesEPS $8.35 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings YieldEarnings$90.274.38xyesEPS $8.35 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$704.2m
Net debt / NOPAT (after-tax)1.48x
Net debt / operating income (pre-tax)1.18x
Interest coverage13.1x
Share count CAGR (buyback)-1.3%
Burning cashno

Bullet Takeaways

Woodward earns a return on equity above 20% and runs aerospace margins guided toward 23%, the signature of a business with real pricing power on specified, certified components. That is the moat the premium multiple is paying for.

The momentum is strong. Q2 fiscal 2026 crossed $1 billion in quarterly sales for the first time, up 23% year over year, and management raised full-year guidance for sales and adjusted EPS on robust aerospace and industrial demand.

At $430 the price works out to about 44x operating income, implying growth held near the self-funding ceiling for roughly eleven years. The static models land near $200, so only the growth-DCF reaches the price. The bet is durable compounding the asset frames cannot capture.

Bull Case

The moat is in the margins and returns, not the marketing. Woodward earns a return on equity above 20% against a cost of equity below 10%, and management guides its Aerospace segment toward margins of 23% to 23.5% and its Industrial segment toward 18% to 18.5%. Those are the economics of a business that designs flight-critical fuel and motion-control systems that get certified into aircraft engines and industrial platforms, components that cannot be swapped out casually once they are designed in. The filing notes Woodward sells components and systems engineered to meet strict emission standards, with a design lead that gives competitive advantage (FY2025 10-K, accession 0001193125-25-296204). That specification lock-in is why the business sustains high returns rather than competing on price.

The aerospace cycle is providing a powerful tailwind, and the aftermarket is the durable part of it. The filing observes that passenger demand has outpaced deliveries of newest-generation aircraft, forcing airlines to keep older legacy aircraft in service longer than anticipated (FY2025 10-K, accession 0001193125-25-296204). Older aircraft flying longer means more maintenance, repair, and overhaul demand for Woodward's installed base, a high-margin, recurring revenue stream that does not depend on new-aircraft build rates. The defense and marine side adds further programs as customers modernize fleets (FY2025 10-K, accession 0001193125-25-296204). This is a two-sided cycle: new-build production is rising while the aftermarket runs hot.

The results confirm the strength and the balance sheet supports the growth. Q2 fiscal 2026 was a record, sales of $1.091 billion up 23%, EPS of $2.19 up 23%, and adjusted EPS of $2.27 up 34%, the first billion-dollar quarter in company history. Management raised full-year guidance for both sales and adjusted EPS. Woodward carries modest net debt of about $704 million with interest coverage near 14x, completed the acquisition of Safran's North American electromechanical actuation business, and announced a $1.8 billion three-year share-repurchase program. Against industrial-controls peers, the combination of aerospace exposure, high margins, and a fresh buyback is the differentiator the elevated multiple reflects, and some analyst fair-value estimates run as high as $470.

Bear Case

The balance sheet looks clean, but the structural concern is what the price demands of it rather than what it carries today. Woodward holds modest net debt of about $704 million, comfortably covered, but the valuation assumes the company compounds at its self-funding ceiling for roughly eleven years, and a business growing that fast eventually has to choose between funding the growth, the dividend, and a $1.8 billion buyback. The buyback at 44x operating income is itself a capital-allocation bet: retiring stock at an elevated multiple accretes per-share value only if the growth justifies the price paid, and if it does not, the company is spending shareholder cash near a peak. Acquisitions like the Safran actuation business and the pending VRM deal add integration risk and use capital that could otherwise cushion a downturn.

The valuation gives the moat no room to slow. No standard valuation family except the growth-DCF reaches the price: the simple excess-return model lands near $91, the residual-income model near $128, the relative-multiple model near $160, and the free-cash-flow yield near $59, all far below the $430 (June 28, 2026) quote. The blended estimate sits near $200. The inversion shows the price requires growth held near the 25% ceiling for about eleven years, and historically only about 15% of comparable fast-growers sustained that pace that long. The recent 23% growth is real but cyclically aided, and the price extrapolates it for a decade.

The cyclicality is the core risk. Aerospace demand depends on airline profitability, aircraft build rates, and defense budgets, all of which can turn. The aftermarket tailwind from older aircraft staying in service reverses when new-generation deliveries finally catch up, removing a high-margin revenue source. The industrial segment is tied to power generation, oil and gas, and marine markets that move with the broader economy. The filing measures backlog as remaining performance obligations (FY2025 10-K, accession 0001193125-25-296204), which gives visibility but does not immunize the company against a demand reversal. If the aerospace cycle peaks or industrial demand softens, a stock priced for eleven years of ceiling-rate growth can fall hard toward the $106 to $205 the reverse-DCF band implies, and the premium multiple, currently above the aerospace-and-defense sector average, would compress at the same time earnings slow.

Valuation

Only the growth-DCF reaches the price, which is the central fact of the valuation. Against the $430.14 quote, the simple excess-return model lands near $91, the Graham number near $88, the residual-income model near $128, the relative-multiple model near $160, the P/Sales model near $163, and the free-cash-flow yield near $59. The DCF perpetual-growth model lands near $241 and the blended X-ray estimate near $200. So the asset, earnings-power, and peer-multiple frames all call the stock richly valued; the price is a bet on durable compounding the static frames cannot capture. (A couple of the methods, the EV/EBITDA and earnings-power lines, return distorted figures from a data quirk in the normalized inputs and should be set aside.)

The inversion measures the bet cleanly. At today's level the market pays about 44x company-wide operating income, which the model translates into operating growth held near the 25% self-funding ceiling for about eleven years, discounted at a 10.1% cost of capital, where each percentage point of cost moves the implied horizon about two years. The near-term growth rate is within what the company has recently delivered; the stretch is the eleven-year duration, which only about 15% of comparable fast-growers managed.

The honest read is a high-quality aerospace and industrial-controls franchise trading at a price the asset and earnings models cannot justify and only the growth model can. The premium is earned by the 20%-plus return on equity, the 23% aerospace margins, and the dual tailwind of rising aircraft production and a hot aftermarket. The question is whether eleven years of near-ceiling growth is realistic for a cyclical business, and the gap between the static models and the price is the margin a buyer is underwriting against the cycle turning.

Catalysts

The April Q2 fiscal 2026 report was the recent catalyst and a strong one: a record $1.091 billion in quarterly sales, up 23%, EPS of $2.19 up 23%, adjusted EPS of $2.27 up 34%, and the first billion-dollar quarter in company history, prompting a raise to full-year guidance. The next earnings report is the key test of whether aerospace and industrial demand holds and whether the segment margins reach the guided 23% and 18% levels, since the price extrapolates the current momentum for years.

The aerospace cycle and acquisitions are the catalysts to watch. Rising aircraft build rates plus the aftermarket tailwind from older aircraft staying in service drive the aerospace segment, and any update on production rates at the major airframers is a read on Woodward's order book. The completed Safran electromechanical actuation acquisition and the pending VRM deal expand the portfolio, and integration progress matters. Capital return is a tangible positive: the new $1.8 billion three-year buyback supports per-share earnings. Analyst views are split, with fair-value estimates ranging from the mid-$300s to $470. The chief risks to the timeline are a peak in the aerospace cycle, a catch-up in new-aircraft deliveries that erodes the aftermarket tailwind, softening industrial demand, and the simple fact that a 44x-operating-income multiple leaves little room for a soft quarter.

Sources: StockTitan: Woodward lifts 2026 outlook after $1.1B quarter; GuruFocus: WWD Q2 2026 record sales and raised guidance; Yahoo Finance: WWD valuation check, $1.8B buyback plan; Public.com: WWD analyst forecast; Motley Fool: WWD Q2 2026 transcript.

Peer Cohorts (Per Segment, With Filing Citations)

Aerospace (reported)

Industrial (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive WWD report on boothcheck