BWXT
BWX Technologies, Inc.
$131.20
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 94.3% above fair value
You pay
$131.20
Bear
$55.26
Fair
$67.54
Bull
$79.82
Bear
$55.26
-57.9%
$3.07 × 18x
Fair
$67.54
-48.5%
$3.07 × 22x
Bull
$79.82
-39.2%
$3.07 × 26x
Adjust Assumptions
22.0x
3.07$
Key Value Driver
Through-cycle normalized EPS ($3.07)
Implied Market Multiple
42.7x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (20 analysts)
$206.88
Divergence from AlphaVal
67%
Summary
Using 7-year normalized EPS of $3.07 at a 22x cycle multiple, the base-case value is $67.54 per share. P/TBV cross-check: 29.9x.
Warnings
This company has a built-in lending arm whose debt is mixed in with the main business. We capped the debt adjustment to avoid overstating what the core business owes.
Price-to-book value of 29.9x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
Wall Street's average price target is $206.88 (from 20 analysts). Our estimate is 67% below the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing