Mog Rocket
Image: Moog.

Component-maker Moog (NYSE:MOG-A) (NYSE:MOG-B) has profited from the long-term trends supporting its key aircraft segment, as demand in the commercial aerospace market exploded higher in recent years. Yet Moog has seen increasing pressure on its aircraft segment despite favorable market conditions.

Coming into its fiscal fourth-quarter report on Friday, Moog investors were hoping that it could return to a more stable growth trajectory. Instead, Moog fell short on some key fundamental metrics, with both sales and earnings falling for a variety of reasons. Let's look more closely at how Moog did, and what could remain ahead for the component maker going forward.

Moog loses altitude
Moog's fiscal fourth-quarter results left much to be desired. Revenue of $623 million was down 7% from the year-earlier quarter, and that compared unfavorably with the $627 million consensus forecast among investors following the stock. Net income fell roughly 30%, to $28.2 million, producing earnings of $0.75 per share. Even after adding back in some of the costs of restructuring and other extraordinary items, adjusted earnings of $0.92 per share were $0.02 less than investors had expected to see.

Sales fell across the board in all of Moog's major segments. The key aircraft-controls business saw sales fall 3%, with the company blaming larger declines in aftermarket demand for military and commercial products for much of the weakness. Airbus sales rose 20% due to the ramp-up of the A350 model, but development work on the military KC-46 tanker program slowed overall military-segment business. Profit for the segment fell more than 10%.

Space and defense revenue fell 4%, as a 16% drop in space-related business more than outweighed a 9% climb in defense-related sales, particularly in military vehicles. Profits for the segment soared from last year's barely breakeven performance.

The industrial side of the business was particularly weak, with systems revenue and components sales both declining 13%. Operating profits for both segments got cut roughly in half. Medical device sales eased downward by 5%, but it was the only area to post gains in segment profits for the quarter.

Can Moog bounce back?
CEO John Scannell believes that Moog did as well as it could. "Fiscal 2015 was a challenging year for our company across multiple fronts," Scannell said, but "in face of these challenges, we delivered solid earnings and record cash flow."

Moog's recent guidance hasn't inspired any strong confidence in the stock. Full-year fiscal 2015 earnings of $3.35 per share fell short of the $3.50 per share guidance that the company gave just last quarter, and even that figure came after guidance cuts in the past. Moog repeated its fiscal 2016 calls for $4 per share in earnings on revenue gains of roughly 2%, consistent with sales of between $2.55 billion and $2.6 billion or so.

Moog investors didn't seem particularly troubled by the news, leaving the stock essentially unchanged after the announcement. Nevertheless, it remains troubling to many that Moog hasn't benefited more from the extremely strong conditions in the commercial aerospace market.

The company will need to work hard to bolster its position in the aircraft space to take full advantage of strong demand as long as it lasts. Unless it does so soon, Moog could lose investor confidence, and start to see its shares perform badly, even if the overall aerospace industry keeps expanding at its recent breakneck pace.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Moog (A shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.