BWX TECHNOLOGIES, INC. (BWXT): what the price requires
At today's price, BWX TECHNOLOGIES, INC. (BWXT) is priced for today's economics sustained for ~7.2 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/BWXT
Headline
| Field | Value |
|---|---|
| Ticker | BWXT |
| Company | BWX TECHNOLOGIES, INC. |
| Current price | $177.39/sh |
| Composition | Government Operations 73% / Commercial Operations 27% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 6.9% |
| Operating margin today | 12.3% |
| Margin compression implied | -5.4pp |
| Must persist for | 7.2y |
| Multiple paid | 42x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 8.6% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2 years.
How unusual the bet is: high
| Reference | Value |
|---|---|
| vs own history | +0.16σ |
| cohort percentile (of 225 peers) | 85 |
| sustained it ~7.2 years at this level | 21% |
| implied end-window share | 0% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 3.65x | 4 | expensive |
| Earnings | 7.05x | 5 | expensive |
| Relative | 1.93x | 5 | expensive |
| Growth | 0.80x | 3 | justifies |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.3%); the inversion above states its own rate.
Per-Model Detail (n=17)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $222.53 | 0.80x | yes | FCF base $0.5B, growth 21% (input: historical growth), terminal g 4.0%, WACC 8.3%, 7yr projection |
| DCF Exit Multiple | Growth | $225.02 | 0.79x | yes | Exit EV/EBITDA: 38.2x / 40.2x / 42.2x (bear / base = today's held flat / bull), 7yr |
| Relative Valuation | Relative | $101.46 | 1.75x | yes | P/E 26.8x (blended: static sector reference 18x + trailing (TTM) 47x), scenarios: 21.7x / 26.8x / 31.9x (bear / base = reference held flat / bull), EV/EBITDA 20.45x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $40.53 | 4.38x | yes | BV/sh $13.93, ROE (TTM) 26.9%, ke 9.3% |
| Two-Stage Excess Return | Asset | $70.11 | 2.53x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $201.47 | 0.88x | yes | Rev $3.4B, growth 21% (input: historical growth; tapered), Terminal P/S: 3.9x / 4.8x / 5.7x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $71.62 | 2.48x | yes | EPS $3.74, growth 19% (input: historical EPS growth), PEG=2.47 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $25.16 | 7.05x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.38B × (1−15%) / WACC 8.3% → EPV (no growth) |
| Residual Income | Asset | $60.71 | 2.92x | yes | BV $13.93 + 5yr PV of (ROE (TTM) 26.9% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $34.24 | 5.18x | yes | √(22.5 × EPS $3.74 × BVPS $13.93) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $41.53 | 4.27x | yes | EBITDA $0.44B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $22.21 | 7.99x | yes | FCF $328.1M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $18.50 | 9.59x | yes | SBC-adj FCF $0.30B (FCF $0.33B − SBC $0.03B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $120.68 | 1.47x | yes | EPS $3.74 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $5.49 | 32.31x | yes | BV $13.93 × (ROIC 3.3% / WACC 8.3%) (excluded from median) |
| P/Sales Sector | Relative | $91.84 | 1.93x | yes | Revenue $3.38B × sector P/S 2.5x |
| PEG Fair Value | Relative | $107.43 | 1.65x | yes | EPS $3.74 × (PEG 1.5 × growth 19.2% (input: historical EPS growth)) → PE 28.7x |
| Earnings Yield | Earnings | $40.43 | 4.39x | yes | EPS $3.74 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $1.5b |
| Net debt / NOPAT (after-tax) | 4.27x |
| Net debt / operating income (pre-tax) | 3.63x |
| Interest coverage | 10.8x |
| Share count CAGR (dilution) | 0.0% |
| Burning cash | no |
Bullet Takeaways
- BWXT holds a near-uncrossable moat as a sole-source manufacturer of classified naval nuclear components, and Q1 2026 showed both the franchise and a fast-accelerating commercial business, with total revenue up 26% and commercial revenue up 121%.
- The central risk is the price, not the moat: at roughly 45 times operating income the stock requires growth at the self-funding ceiling for nearly seven years, a pace only about a quarter of comparable fast-growers have sustained.
- Watch backlog conversion against the raised 2026 guidance, with backlog up 77% to $8.7 billion and more than $1.40 billion of new naval contracts, against a revenue base concentrated in U.S. Government programs.
Bull Case
The surprising number in the quarter was not the naval business everyone watches; it was the commercial side. BWXT's commercial operations grew organic revenue 39% and total revenue 121% in the first quarter of 2026, a pace that does not fit the picture of a sleepy government contractor. The whole company grew revenue 26% to $860.2 million with earnings of $1.12 per share, up 22% year over year. For a business whose value has always rested on its naval franchise, the commercial acceleration is the part that reframes the growth runway.
The naval franchise is the moat, and it is close to uncrossable. Through its Government Operations segment BWXT engineers and manufactures, in the 10-K's words, "precision naval nuclear components, reac[tors]" for the U.S. fleet, a position protected by "high regulatory licensing costs" and by the fact that "significant portions of the designs, processing and final product are classified by the U.S. Government, requiring applica[ble clearances]." You cannot simply decide to compete here; you need decades of qualification and a security posture no new entrant can stand up quickly. That moat converted to visible demand in the quarter, with more than $1.40 billion in new Naval Nuclear Propulsion Program contracts spanning Virginia-class, Columbia-class, and early Ford-class work.
Backlog is the clearest evidence the runway is real. It reached $8.7 billion, up 77% year over year and 19% sequentially, which for a company guiding to at least $3.75 billion of 2026 revenue is multiple years of visible work. Management raised full-year guidance across revenue, adjusted EBITDA, and earnings, and is investing ahead of the demand with a $200 million acquisition and a planned new U.S. facility. The balance sheet supports the expansion: interest covered about ten times over, no net dilution, and a steady share count. A sole-source defense supplier with a 77%-larger backlog and an accelerating commercial business is a rare combination of moat and growth.
Bear Case
The moat is not eroding; the price is. BWXT's defensible advantages, the classified designs, the licensing barriers, the sole-source naval position, are as intact as ever, which means the bear case cannot be that competitors are taking share. It is that the price now assumes the GROWTH off that moat compounds at a pace the company has rarely sustained. At $187.20 the market is paying roughly 45 times operating income, and inverting that price demands operating profit grow at its self-funding ceiling for nearly seven years, well above what BWXT has actually delivered. Only about 23% of comparable fast-growers held such a pace even that long. The moat guarantees the work; it does not guarantee the multiple.
The valuation lenses make the stretch concrete. Only the forward-growth, cash-flow method reaches the price; the asset, earnings-power, and peer-multiple lenses all read it as richly valued, with the earnings-power methods placing fair value at a small fraction of the price. That is the signature of a quality-premium stock: the static frames cannot price a durable compounder, but the gap they leave is the entire bet. A company beating estimates and still falling about 7% on the print, as BWXT did in the quarter, is a market quietly questioning whether the growth justifies the multiple already paid.
The concentration risk is the other half. The 10-K states plainly that the company relies "on U.S. Government contracts (either directly or as a sub-tier contractor to a government contractor) for a substantial percentage of our revenue," which ties a large share of the business to defense appropriations and program timing the company does not control. Government Operations grew only 4% in the quarter even as commercial surged, a reminder that the core franchise is steady rather than fast. Leverage adds modest amplification: net debt near $1.5 billion is about 3.6 times operating income, comfortable while contracts flow but a constraint if a budget cycle or program delay interrupts the cadence. The downside is bounded by the irreplaceable franchise, but at 45 times earnings the distance from that floor to the price is large.
Valuation
Begin with the bet the price is making. At $187.20 BWXT trades at about 45 times operating income, and inverting that price implies operating profit compounding at its self-funding ceiling for nearly seven years. That is a demanding assumption, above what the company has historically delivered, and history says only about a quarter of comparable fast-growers sustained such a run that long. The engine reads the priced-in assumption as high, a demanding bet on continued execution, and that is the honest characterization: the price is paying for years of compounding, not for today's earnings.
The valuation lenses agree the premium is real and one-sided. Only the forward-growth, cash-flow methods reach the price; the asset-value, earnings-power, and peer-multiple lenses all read the stock as expensive, the earnings-power methods most starkly, placing the price at several times their central estimate. When a single family justifies the price and the rest call it dear, the gap is a durability or quality premium that the backward-looking methods structurally cannot frame. For a business with a near-uncrossable moat, some premium is warranted; the question is whether seven years of ceiling-rate growth is the right size for it.
The support under the premium is the backlog and the balance sheet, not net cash. Backlog of $8.7 billion against guidance for at least $3.75 billion of 2026 revenue gives the growth assumption unusual visibility, which is what separates BWXT from a hope-based premium. Solvency is sound rather than fortress: net debt of about $1.5 billion is roughly 3.6 times operating income with interest covered about ten times over, and the share count is stable, so the bet is not being diluted away. The decisive variable is conversion of that backlog at the guided margins: hit the raised 2026 targets and the multiple compresses naturally as earnings grow into it, stall on a program delay or appropriations gap and the lenses that already call the price expensive get the last word.
Catalysts
The first quarter of 2026 was a clear beat with a complicated reaction. Revenue rose 26% to $860.2 million and earnings reached $1.12 per share, up 22% year over year and ahead of estimates. The standout was the commercial side, with organic revenue up 39% and total commercial revenue up 121% on stronger throughput and work timing, while Government Operations grew a steadier 4%. Backlog climbed to $8.7 billion, up 77% year over year and 19% sequentially, supported by more than $1.40 billion in new U.S. Naval Nuclear Propulsion Program contracts across Virginia-class, Columbia-class, and early Ford-class work.
Management raised full-year 2026 guidance across revenue, adjusted EBITDA, earnings, and free cash flow, projecting at least $3.75 billion of revenue with high-teens growth. The strategic posture is to invest ahead of nuclear demand, including a $200 million acquisition and a planned new U.S. facility. Despite the beat and the raise, the stock fell about 7% on the print, a sign the premium multiple had already discounted strong results.
The forward watch items are backlog conversion, the cadence of naval awards, and the commercial and advanced-reactor pipeline. Analyst sentiment is constructive, with a consensus Buy and recent target increases to $225 at both Northland and BTIG, against a consensus near $208. The longer-dated catalysts sit in commercial nuclear and advanced-reactor development, where the company is leveraging its government-grade capabilities into a growing civilian market. The next quarterly print and the pace of new naval contract awards are the cleanest near-term tests of whether the raised guidance holds.
Peer Cohorts (Per Segment, With Filing Citations)
Government Operations (reported)
- HII (HUNTINGTON INGALLS INDUSTRIES, INC.)
- (no filing in the citation store)
- GD (GENERAL DYNAMICS CORPORATION)
- (no filing in the citation store)
- LMT (LOCKHEED MARTIN CORPORATION)
- (no filing in the citation store)
- LHX (L3HARRIS TECHNOLOGIES, INC.)
- (no filing in the citation store)
- NOC (NORTHROP GRUMMAN CORP /DE/)
- (no filing in the citation store)
- LDOS (Leidos Holdings, Inc.)
- (no filing in the citation store)
- LEU (Centrus Energy Corp)
- (no filing in the citation store)
Commercial Operations (reported)
- CCJ (Cameco Corp)
- (no filing in the citation store)
- LEU (Centrus Energy Corp)
- (no filing in the citation store)
- GEV (GE Vernova Inc.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Q1 FY2026 earnings call, 2026 · Q1 FY2026 earnings release, 2026 · Q1 FY2026 disclosures, 2026 · FY2026 guidance, 2026 · analyst notes, 2026