Today's Dead Cat Bounce Stock: Woodward (WWD)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Woodward ( WWD) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Woodward as such a stock due to the following factors:

  • WWD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $17.0 million.
  • WWD has traded 91,936 shares today.
  • WWD is up 3.2% today.
  • WWD was down 6% yesterday.

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More details on WWD:

Woodward, Inc. designs, manufactures, and services energy control and optimization solutions for the aerospace and energy markets worldwide. The stock currently has a dividend yield of 0.6%. WWD has a PE ratio of 21.2. Currently there are 7 analysts that rate Woodward a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Woodward has been 254,500 shares per day over the past 30 days. Woodward has a market cap of $3.4 billion and is part of the industrial goods sector and aerospace/defense industry. The stock has a beta of 0.84 and a short float of 3.1% with 5.23 days to cover. Shares are up 6.8% year-to-date as of the close of trading on Tuesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Woodward as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 2.4%. Since the same quarter one year prior, revenues slightly increased by 1.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.61, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.38, which illustrates the ability to avoid short-term cash problems.
  • WOODWARD INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, WOODWARD INC increased its bottom line by earning $2.46 versus $2.10 in the prior year. This year, the market expects an improvement in earnings ($2.66 versus $2.46).
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 31.76% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Machinery industry and the overall market on the basis of return on equity, WOODWARD INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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