Shares of Woodward Inc. (WWD) tumbled 7.54% in after-hours trading on Monday, despite the company reporting better-than-expected third-quarter results and raising its full-year guidance. The sharp decline comes as a surprise, given the positive financial performance and outlook presented by the aerospace and industrial equipment manufacturer.

For the third quarter ended June 30, Woodward reported earnings per share of $1.76, surpassing the analyst consensus estimate of $1.63 by 8.11%. This represents a 7.98% increase from the same period last year. The company's quarterly sales reached $915.446 million, beating the analyst consensus estimate of $886.639 million by 3.25% and marking a 7.99% year-over-year growth.

In light of its strong performance, Woodward raised its fiscal year 2025 guidance. The company now expects adjusted earnings per share between $6.50 and $6.75, up from the previous forecast of $5.95 to $6.25. Revenue projections were also increased to a range of $3.45 billion to $3.525 billion, compared to the earlier estimate of $3.375 billion to $3.5 billion. However, Woodward lowered its adjusted full-year free cash flow guidance to $315 million to $350 million from the previous $350 million to $400 million, which may have contributed to the negative market reaction.

The unexpected stock decline despite positive earnings and guidance raises questions about investor sentiment and potential concerns not immediately apparent in the financial results. It's possible that market participants are focusing on the reduced free cash flow guidance or have concerns about the sustainability of growth in certain segments. As the market digests this information, it will be crucial to monitor any additional insights or guidance provided by Woodward's management in the coming days to better understand the factors driving this after-hours stock movement.