How Should Investors View Woodward After Shares Soared 50% in 2025?

Are you staring at Woodward’s stock chart, wondering if it is time to jump in or take your gains off the table? You are not alone. Woodward has been on a tear lately, grabbing the attention of investors everywhere. In just the past week, shares are up 4.8%, and over the last month they have added 6.1%. The bigger picture is even more impressive, with Woodward’s stock gaining 50.4% year-to-date, 56.4% over the last year, and an astonishing 211.3% over the past three years. Not many companies can say they have more than tripled their value in just a few years. That kind of performance is hard to ignore.

Much of this upward momentum traces back to a shift in how the market views Woodward’s prospects. Broader trends in the industrial and aerospace sectors, coupled with increased demand across the company’s core markets, have fueled optimism and propelled the share price higher. Investors seem to be pricing in not only strong fundamentals but also the potential for continued long-term outperformance, especially as companies like Woodward benefit from global supply chain modernization and infrastructure investments.

All this excitement leaves one big question: is Woodward undervalued at these levels? By the numbers, the company’s valuation score is 0 out of 6, which means, by traditional metrics, it does not check any boxes for being undervalued. Of course, there is more than one way to look at valuation. Let’s break down the main approaches, and at the end, I will walk you through an even smarter way to tell if the stock is truly a buy right now.

Woodward scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Woodward Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates a company's intrinsic value by projecting its future cash flows and discounting those amounts back to their present value. For Woodward, this approach relies on forecasting how much cash the business can generate over coming years, then calculating what those future dollars are worth today.

Currently, Woodward’s Free Cash Flow (FCF) stands at $282.9 million. Analyst forecasts suggest strong growth ahead, with FCF expected to reach about $545.7 million by 2028. Looking further out, cash flows are projected to steadily climb, with Simply Wall St extending the estimate to $825.8 million by 2035. While analyst numbers only go out five years, the remaining projections are extrapolated from recent trends and sector outlooks. All values are reported in US dollars.

After crunching these numbers, the DCF model estimates Woodward’s fair value per share at $212.78. Compared to where the stock trades now, Woodward is roughly 21.1% overvalued according to this model. In other words, the current share price already reflects quite a bit of optimism for the future.

Result: OVERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Woodward.

Our Discounted Cash Flow (DCF) analysis suggests Woodward may be overvalued by 21.1%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Woodward Price vs Earnings

For profitable companies like Woodward, the Price-to-Earnings (PE) ratio is a popular and effective valuation tool. This metric compares a company’s share price to its earnings per share, giving investors a sense of how much they are paying for each dollar of profit. Higher PE ratios are often justified by strong growth expectations and lower risk profiles, while lower PEs reflect slower growth or greater uncertainty.

Currently, Woodward trades at a PE ratio of 39.9x, which is just above both its industry average of 39.1x and its peer group average of 38.7x. On the surface, this suggests the company is being valued similarly to other names in the Aerospace and Defense sector. However, not all companies are created equal. Factors such as earnings growth, profit margins, and company-specific risks can all influence what a "normal" or "fair" PE ratio should be.

This is where Simply Wall St’s Fair Ratio comes in. Unlike a straight comparison with peers or industry averages, the Fair Ratio estimates what Woodward’s PE should be based on a wide range of relevant variables, such as future earnings growth, market cap, profit margins, and risk. For Woodward, the Fair Ratio is 26.5x, noticeably below its actual PE. That means, once you account for all those individual factors, the market is pricing Woodward at a significant premium relative to what is justified by its financial profile.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Woodward Narrative

Earlier we mentioned there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is your personal story about what a company is worth, built by connecting your expectations for future revenue, earnings, and margins to your own fair value estimate.

Narratives help you move beyond just looking at numbers by linking what you believe is happening at Woodward, such as its positioning in cleaner propulsion or automation, to a financial forecast and a resulting fair value per share. Instead of passively following traditional ratios, Narratives allow you to actively express your view of the business, making your investment research practical and personalized.

With Simply Wall St’s easy-to-use Community page, Narratives are accessible to everyone, not just the pros, and are used by millions of investors to compare their outlook with others. Narratives quickly show if your fair value is above or below the current share price, which helps you decide whether it is time to buy or sell, and they automatically update as new information like earnings or news comes in.

For example, one investor might have a bullish Narrative, projecting Woodward’s fair value at $335 based on high growth in aerospace electrification, while another is more cautious, estimating just $245 due to margin risks and execution challenges.

Do you think there's more to the story for Woodward? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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