Is It Too Late To Consider BWX Technologies After Its Recent Share Price Pullback?

• If you are wondering whether BWX Technologies is still worth considering after its huge run, or if the easy money has already been made, you are not alone in asking whether the current price really matches the company’s long term potential.
• Despite a powerful multi year climb with shares up 211.5% over 5 years and 198.8% over 3 years, the stock has recently cooled off, slipping 17.5% over the last month while still holding a 58.1% gain year to date and 37.4% over the past year.
• That pullback has come as investors digest a stream of news around BWX’s role in long duration defense and nuclear programs, including ongoing work tied to U.S. Navy propulsion and strategic national security initiatives. The market is weighing how durable those contract pipelines are, and whether heightened geopolitical tensions justify the premium that has been built into the share price.
• Right now, BWX Technologies only scores 1/6 on our valuation checks. At first glance, this suggests that it does not screen as obviously cheap. However, the story is more nuanced, so we will walk through the usual valuation tools before showing you a different way to think about what BWX is really worth.

BWX Technologies scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: BWX Technologies Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a business is worth by projecting its future cash flows and discounting them back to today, reflecting the time value of money and risk. For BWX Technologies, the model uses a 2 Stage Free Cash Flow to Equity framework based on cash flow projections in $.

BWX generated about $448.2 Million in free cash flow over the last twelve months, and analysts expect this to rise steadily as defense related contracts ramp up. Simply Wall St aggregates analyst estimates for the next few years and then extrapolates further out, with projected free cash flow reaching roughly $740.7 Million by 2035. Each of these future cash flows is discounted back to today and combined with a terminal value to arrive at an intrinsic value estimate.

On this basis, the DCF model suggests a fair value of about $121.63 per share, implying the stock is roughly 44.9% overvalued relative to its current market price. In other words, a lot of future growth already appears to be priced in.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests BWX Technologies may be overvalued by 44.9%. Discover 927 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for BWX Technologies.

Approach 2: BWX Technologies Price vs Earnings

For a consistently profitable business like BWX Technologies, the price to earnings ratio is a useful yardstick because it directly links what investors pay for each share to the company’s underlying earnings power. In general, faster growing and lower risk companies can justify a higher PE ratio, while slower growth or higher uncertainty tends to pull that “normal” or “fair” PE down.

BWX Technologies currently trades on about 52.48x earnings, which is well above both the Aerospace and Defense industry average of roughly 37.55x and our selected peer group at around 34.71x. To move beyond simple comparisons, Simply Wall St calculates a proprietary “Fair Ratio” that estimates what PE multiple a stock should command given its earnings growth outlook, profit margins, industry, market cap and specific risks. This tailored view usually offers a cleaner signal than blunt peer or sector averages, which can be skewed by very different business models or balance sheets.

For BWX Technologies, the Fair Ratio is 30.40x, notably below the current 52.48x. That gap suggests investors are paying a substantial premium to the earnings profile we would normally expect.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1440 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your BWX Technologies Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives.

A Narrative is simply your story about a company, translated into numbers like future revenue, earnings, margins and, ultimately, the fair value you think is reasonable.

Instead of stopping at ratios like PE, a Narrative connects what you believe about BWX Technologies business drivers to a forecast, and then to a fair value that you can directly compare with today’s share price to decide whether it looks like a buy, hold or sell.

On Simply Wall St, Narratives sit inside the Community page and are used by millions of investors as an accessible tool, updating dynamically as fresh news, earnings and guidance change the outlook.

For BWX Technologies, one investor Narrative might see nuclear and defense tailwinds justifying a fair value up near 220, while a more cautious Narrative might anchor closer to 120. The gap between those views is what creates both opportunity and risk in the current price.

Do you think there's more to the story for BWX Technologies? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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