BWX Technologies BWXT shares have soared 47.1% in a year, outperforming the broader Zacks Computer and Technology sector’s return of 32.4%. It has also outperformed the Zacks Electronics - Miscellaneous Components industry and competitors, including ESAB Corporation ESAB, Baker Hughes Company BKR and Symbotic Inc. SYM. 

Over the same time frame, shares of ESAB and Baker Hughes have risen 38.7% and 18.2%, respectively, while shares of Symbotic have plunged 55.7%. The industry returned 2.4% in a year.

This outperformance is attributable to the remarkable growth in its government operations, primarily fuelled by a surge in the production of naval nuclear components and microreactors. Significant developments in its commercial operations, which are producing higher revenues from commercial nuclear components and fuel, as well as a notable rise in medical sales, further support this impressive growth.

Notably, BWX Technologies’ top-line growth has also been facilitated by the ongoing expansion of the engineering and design work carried out by its advanced technologies business, especially in the defense market.

BWX Technologies, Inc. Price and Consensus

BWX Technologies, Inc. price-consensus-chart | BWX Technologies, Inc. Quote

Constant Deal Accomplishments Bode Well for BWXT

BWX Technologies' strong position in the nuclear technology sector, especially with its government contracts for defense and naval applications may bode well for its near-term prospects. The continuous flow of contracts is driving its growth.

Earlier this month, BWX Technologies-led joint venture, West Valley Cleanup Alliance, received a cleanup contract from the U.S. Department of Energy (DOE). The contract has a 10-year ordering period and is worth $3 billion in value.

Prior to this in mid-October, another joint venture firm, H2C, received a contract from the DOE to begin the Hanford Integrated Tank Disposition Contract. In the same month, its subsidiary, Nuclear Fuel Services, received a DOE contract for High-Assay Low-Enriched Uranium deconversion services.

Additionally, BWX Technologies is also focusing on partnerships and acquisitions to broaden its portfolio and expand its global footprints. In mid-December 2024, its subsidiary, BWX Canada, partnered with Westinghouse Electric Company to support nuclear new-build projects in Canada and globally.

BWX Technologies is also focusing on acquisitions to increase the scope of its product line and market penetration. In November, it signed an agreement to acquire L3Harris’ Aerojet Ordnance Tennessee (A.O.T.) business for approximately $100 million. A.O.T. is one of the leading suppliers of specialty materials, including products made from depleted uranium. The acquisition of A.O.T. will enable BWXT to develop more advanced materials for space, military and commercial applications.

BWXT Offers Positive FY24 Guidance

For 2024, BWX Technologies anticipates $2.7 billion in revenues. The figure, which shows an 8% year-over-year increase, is in line with the Zacks Consensus Estimate.

Adjusted earnings for the year are expected to be $3.20 per share. The Zacks Consensus Estimate for earnings is pegged at $3.23 per share, up by a couple of pennies over the past 60 days. The figure indicates a year-over-year rise of 7%.

BWX Technologies’ earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 9.1%.

Conclusion: Buy BWXT Stock for Now

BWXT shares currently have a stretched valuation, as suggested by a Value Style Score of D. The stock is trading with a forward 12-month Price/Sales of 3.63X compared with the industry’s 2.49X. The valuation metric may initially appear steep. However, this premium is justified by the company’s strong growth prospects, driven by its robust portfolio and continued contract wins. 

BWXT currently carries a Zacks Rank #2 (Buy), implying that investors should accumulate the stock and existing investors should keep holding the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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