Q3 Earnings Preview for Curtiss-Wright (NYSE:CW)

in EARNINGS/INVESTING IDEAS by

Curtiss-Wright Corporation (NYSE:CW) is scheduled to report Q3 earnings results after markets close for trading on October 28, 2020.

The company is expected to report earnings of $1.54/share on revenue of $566.5 million. The consensus earnings per share (EPS) of $1.54/share is based on a poll of 5 analysts and represents a decline in eps of −21.2% over the same quarter last year, when the company reported earnings of $1.95/share.

The revenue forecast of $566.5 million based on a poll of 5 analysts implies a year-over-year (YoY) decline in revenue of −7.9%. Last year the company reported $614.9 million in revenue for the quarter.

Expected to report EPS contraction of −21.2% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $566.47 $614.88 −7.9%
EPS $1.54 $1.95 −21.2%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.

What are your expectations from Curtiss-Wright Corporation for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $1.28 $1.31 2.6% Beat
Q1, 2020 $1.29 $1.34 3.6% Beat
Q4, 2019 $2.08 $2.12 2.0% Beat
Q3, 2019 $1.83 $1.95 6.6% Beat
Q2, 2019 $1.77 $1.90 7.1% Beat
Q1, 2019 $1.16 $1.30 11.6% Beat
Q4, 2018 $1.75 $1.90 8.8% Beat
Q3, 2018 $1.56 $1.70 8.8% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 8.9%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 3, 2020 $89.12 $97.01 8.9% Increase
May 6, 2020 $97.27 $91.12 −6.3% Decline
February 26, 2020 $133.51 $123.06 −7.8% Decline
October 30, 2019 $129.99 $135.25 4.0% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.58, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.58 implies a 0.5% chance of earnings manipulation.

Fundamentals And Technical Analysis

Curtiss-Wright Corporation is currently trading at $91.07/share, down −3.4% for the day. The company is trading at approximately 60.8% of its 52-week high of $149.90/share. The company’s stock price is down −6.1% since the last earnings report and down −3.5% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 40.32 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:CW Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 14.87 and a forward P/E multiple of 13.75.

Curtiss-Wright Corporation’s current share price also implies a price-to-book (P/B) multiple of 2.21. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $91.07
P/E Ratio 14.9x
P/E Ratio (Fwd) 13.8x
PEG Ratio −1.4
Total Debt / Total Capital 19.9%
Levered Free Cash Flow $263.2 million
EV / EBITDA 9.4x

Finbox

Curtiss-Wright Corporation is a mid-cap stock with a market capitalization of $3.786 billion and a total enterprise value of $4.603 billion. The company operates in the Industrials sector and the Aerospace & Defense industry.

Curtiss-Wright Corporation, together with its subsidiaries, designs, manufactures, and overhauls precision components, and engineered products and services primarily to the aerospace, defense, general industrial, and power generation markets worldwide. The company operates through three segments: Commercial/Industrial, Defense, and Power. The Commercial/Industrial segment offers industrial vehicle products, such as electronic throttle control devices, joysticks, and transmission shifters; sensors, controls and electro-mechanical actuation control components, and utility systems used in commercial aircrafts; valves for use in the industrial markets; and surface technology services, including shot peening, laser peening, coatings, and advanced testing. The Defense segment provides commercial off-the-shelf embedded computing board-level modules, data acquisition and flight test instrumentation equipment, integrated subsystems, instrumentation and control systems, turret aiming and stabilization products, and weapons handling systems; and avionics and electronics, and aircraft data management solutions to the commercial aerospace market. The Power segment offers hardware, pumps, pump seals, control rod drive mechanisms, valves, fastening systems, specialized containment doors, airlock hatches, spent fuel management products, and fluid sealing products for nuclear power plants and nuclear equipment manufacturers; and naval propulsion and auxiliary equipment, including coolant pumps, power-dense compact motors, generators, steam turbines, valves, and secondary propulsion systems, as well as ship repair and maintenance services primarily to the U.S. navy. Curtiss-Wright Corporation was founded in 1929 and is headquartered in Davidson, North Carolina.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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