BWXT Valuation Updates

SEQH Capital Partners Research

Ticker: BWXT | Date: 18 Oct 2025 | Close: US $203.99 | Rating: BUY
Price Targets: US$260 (DCF) | US$270 (NAV) | US$280 (SOTP) | Down-side US$180 (defense budget cut) | Blue-sky US$300 (SMR FID + refueling boom)

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1. Post-SMR Rally Set-Up

• Close: $203.99 → EV $22.3 B (net cash) → EV/EBITDA 19.5× vs defense contractor median 15× – premium justified by 12% EPS CAGR (2024-27E) and SMR optionality.

• Q2-2025 revenue: $764 M (+12% YoY) – ninth consecutive quarter of double-digit top-line growth; adj-OP margin 25.1% (sector-best).

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2. Revenue & Profitability Deep Dive (TTM $M)

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3. Multi-Method Valuation Cluster

A. DCF (9% WACC; 2% terminal; USD)

Assumptions: 25% OP margin, R&D 3% of sales, net capex 5% of revenue, tax 21%.

B. NAV (sum-of-parts DCF of segments + SMR option)

Stock = 0.50× NAV → 50% discount to sum-of-parts.

C. Peer Regression (EV/EBITDA vs. margin & growth)

Panel: LMT, RTX, GD, NOC, BWXT Model: EV = α + β₁(EPS-g) + β²(EBITDA-m) + β³(div-y) BWXT residual +US$5 B → fair EV $27.3 B → $270/sh.

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4. Cash-Flow Leverage to SMR

• 2026E FCF: $900 M @ 25% margin → $12.50/sh → 6.1% yield @ $203.99 – highest in defense sector.

• Δ$100 M more SMR orders → Δ$0.15/sh annual EPS – order book still >$2 B.

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