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Boeing Sets Sights on Woodward Acquisition

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Boeing’s new target?

On February 8, 2018, the Wall Street Journal reported that Boeing (BA) intends to acquire aerospace parts maker Woodward (WWD), a Colorado-based manufacturer, independent designer, and service provider of control solutions for the industrial and aerospace markets. Woodward’s aerospace systems and components optimize the performance of fixed wing and rotorcraft platforms in aircraft, ground vehicles, and other equipment.

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Stock price movement

The report said that Boeing has been in discussions with Woodward for the last several months. After touching its 52-week high of $357.0 on February 1, 2018, Boeing stock had fallen 10% by February 8, 2018. The company’s stock tumbled 5.3% amid a mass sell-off in the market and closed at $329.7 on that date.

Woodward stock climbed 7.5% on the same day to close on $82.9 per share. The jump in its stock price was WWD’s biggest gain in over three years. However, when the company issued a press release on February 8, 2018, WWD stock plummeted around 10% to $74.70 in after-hours trade.

Boeing’s strong 4Q17 earnings sent its stock to new highs in 2018. Since the beginning of 2018, the company has returned 11.8% to investors in spite of the sell-off tide that swept away billions of dollars from the market recently. In the last one year, BA stock has delivered returns of 103%. The returns of its peer group during the same time period are as follows:

  • Lockheed Martin (LMT): 31.4%
  • Northrop Grumman (NOC): 40%
  • Embraer (ERJ): 12.5%
  • Raytheon Company (RTN): 35.3%

The iShares Dow Jones US Industrial ETF (IYJ), a broad indicator of the US industrial sector, returned 15% in the last one-year period.

In the next part, we’ll discuss Woodward and Boeing’s deal in more detail.

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