Woodward director goes on open-market buying spree

FORT COLLINS – Paul Donovan, an independent director of Woodward Inc., has spent much of the past 16 months buying thousands of shares of the company’s stock on the open market. Analysts call the move a strong vote of confidence in the 150-year-old manufacturer of defense, energy and aerospace components.

Donovan, 66, most recently bought more than 1,100 shares of Fort Collins-based Woodward (Nasdaq: WWD) for nearly $50,000. His purchases spanned three days from Jan. 29 to Jan. 31 as Woodward’s stock hovered around $42.

“When I see corporate executives putting their money where their mouth is and investing in their own stock with their own dollars, I tend to view that as a pretty good barometer,” said Michael Ciarmoli, vice president of Equity Research for KeyBanc Capital Markets. “It’s a very good indicator that there’s an internal confidence level, an internal belief in terms of the growth prospects or profitability prospects of the company.”

Attempts to reach Donovan were unsuccessful and a Woodward spokesman also declined to arrange an interview with him.

Donovan’s purchases, while noteworthy, don’t make him the largest shareholder on the board. That honor goes to John Halbrook, who owns nearly 1.3 million shares and controls more than 1.8 percent of all outstanding stock, according to Woodward’s latest annual report. Woodward is one of the largest private-sector employers in Northern Colorado with about 1,475 employees in a 2013 tally.

Donovan has done well with the purchases to date. He started buying in September 2012 when shares were trading at $36.21. The open-market price has risen 17 percent the past 16 months, reaching $42.50 for this most recent purchase.

Donovan’s investments come as forecasts in the aerospace and energy segments improve. Woodward posted $1.1 billion in aerospace revenue and $874 million in energy revenue during fiscal 2013. Revenue totaled $1.93 billion in fiscal 2013, up from $1.87 billion the prior fiscal year. The company earned $146 million in fiscal 2013 vs. $142 million during fiscal 2012.

Woodward executives have said the company’s growth curve will continue next year, with revenues projected to reach at least $1.95 billion, and earnings per share topping $2.10.

Ciarmoli, who covers Woodward, has rated the stock as “hold,” because of weaknesses in the industrial gas turbine and renewable-energy markets as well as lower defense sales. Woodward, however, plays in two industries poised for growth: commercial aerospace and natural gas, he said.

Ciarmoli said Woodward aims to generate $3 billion in revenue by 2018, with 9 percent annual growth.

“There’s probably going to be some short-term bumps and it’s not going to be entirely smooth, but they’re extremely well-positioned to ride the trends in both of those markets,” he said.

In aerospace, Woodward has developed control systems aimed at improving efficiency and reducing fuel costs on almost every new commercial jet, Woodward chief executive Tom Gendron said recently at an annual meeting with investors.

After commercial aerospace companies relied on the same aircraft for years, companies such as Boeing Co. (NYSE: BA) and Airbus Group N.V. (OTC: EADSY) finally are upgrading commercial aircraft fleets, said Wayne Plucker, aerospace and defense industry research manager for Frost & Sullivan, a Mountain View, Calif.,-based business consulting firm.

The airline industry’s No. 1 cost has shifted from personnel to fuel, so manufacturers that provide systems that reduce fuel costs on new aircraft, such as the Boeing 787 Dreamliner and Airbus A320neo, can look forward to a good future, Plucker said.

“Manufacturers that are on those airframes will be in good stead for the foreseeable future,” he said.

Woodward also is developing technology in natural-gas extraction, processing and power generation that Gendron has said would feed the U.S. natural-gas boom. As people in developing countries enter the middle class, they will consume more energy and natural gas will play a key role in that trend.

Additionally, Woodward is building a new headquarters in Fort Collins at the intersection of Lemay and Lincoln avenues that is expected to be complete in 2015.

Board members such as Donovan typically have attorneys who advise them on when to buy stock to avoid any appearance of impropriety, such as insider trading, said Cris de la Torre, professor of finance and business law at the University of Northern Colorado. For example, board members that act on a company’s key announcements before they are made public can face scrutiny.

Investors would do well to pay attention to open-market stock purchases by insiders such as board members, de la Torre said.

“If you’re an investor and you see someone doing that,” he said, “that’s good news.”

FORT COLLINS – Paul Donovan, an independent director of Woodward Inc., has spent much of the past 16 months buying thousands of shares of the company’s stock on the open market. Analysts call the move a strong vote of confidence in the 150-year-old manufacturer of defense, energy and aerospace components.

Donovan, 66, most recently bought more than 1,100 shares of Fort Collins-based Woodward (Nasdaq: WWD) for nearly $50,000. His purchases spanned three days from Jan. 29 to Jan. 31 as Woodward’s stock hovered around $42.

“When I see corporate executives putting their money where their mouth is and investing in their own stock with their own dollars, I tend to view that as a pretty good barometer,” said Michael Ciarmoli, vice president of Equity Research for KeyBanc Capital Markets. “It’s a very good indicator that there’s an internal confidence level, an internal belief in terms of the growth prospects or profitability prospects of the company.”

Attempts to reach Donovan were unsuccessful and a Woodward spokesman also declined to arrange an interview with him.

Donovan’s purchases, while noteworthy, don’t make him the largest shareholder on the board. That honor goes to John Halbrook, who owns nearly 1.3 million shares and controls more than 1.8 percent of all outstanding stock, according to Woodward’s latest annual report. Woodward is one of the largest private-sector employers in Northern Colorado with about 1,475 employees in a 2013 tally.

Donovan has done well with the purchases to date. He started buying…