BWXT
BWX Technologies, Inc.
$202.91
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 102.9% above fair value
You pay
$202.91
Bear
$78.95
Fair
$100.00
Bull
$121.05
Bear
$78.95
-61.1%
$3.07 × 18x + net cash
Fair
$100.00
-50.7%
$3.07 × 22x + net cash
Bull
$121.05
-40.3%
$3.07 × 26x + net cash
Key Value Driver
Through-cycle normalized EPS ($3.07)
Implied Market Multiple
66.1x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $225.00 from 16 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $100.00 per share.
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 46.2x 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 $225.00 (from 16 analysts). Our estimate is 74% 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