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Summary

  • Curtiss-Wright reported strong second quarter 2014 earnings.
  • Overall revenue increased 9%, commercial revenue increased 14% and energy sales climbed 13%.
  • I said in my original article that if the company's energy segment performs well, its valuation could see upward revision.
  • Since the company’s energy sales climbed 13%, I am now bullish on the stock.

Curtiss-Wright's (NYSE:CW) revenues increased 9% in the second quarter of 2014 to $652 million, from $598 million in 2013, primarily due to strong performance of its energy and commercial divisions. The company's commercial revenue increased 14% and energy sales increased 13% year-over-year. CW's net earnings increased 31% to $46 million, or $0.93 per diluted share, from $35 million, or $0.74 per diluted share, in 2013.

Based on the solid first half results in 2014, Curtiss-Wright's management raised full-year 2014 earnings guidance. Diluted EPS guidance revised upwards in the range of $3.50 - $3.60 from earlier $3.35 - $3.45, and free cash flow guidance revised upwards to $180 - $200 million from earlier $170 - $190 million. In my original article on CW I argued that the company is undervalued in terms of Price to Sales and Price to Book and there is significant room for upward revision for the stock price if the company's energy segment performs well. Since CW's revenue from energy business increased 13% year-over-year, I am now feeling bullish on the stock.

In the article, I noted that the company has set clear long-term financial targets of achieving 5 - 6% organic revenue growth, double-digit EPS growth, and 12.5 - 14% operating margins growth. In the second quarter of 2014, Curtiss-Wright's revenue growth remained impressive, and the company achieved double-digit EPS growth. Further, the company's operating income increased 27% to $77 million, from $61 million in 2013, and operating margin increased 160 basis points to 11.7%, from 10.1% in 2013. I feel that the company is heading towards the right direction, and long-term investors should buy the stock.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

Source: Update: Curtiss-Wright Earnings