A Look At Babcock & Wilcox (BW) Valuation After A Sharp One Year Share Price Run

Recent performance snapshot for Babcock & Wilcox Enterprises

Babcock & Wilcox Enterprises (BW) has recently drawn investor attention after a strong run in its shares, with the stock up 7.1% over the past day and 12.2% over the past week.

Over the past month the stock has returned 80%, while the past 3 months show a gain of about 190%. Year to date, the share price has risen 48.8%, and the 1 year total return stands at 547.3%.

Longer term, the reported 3 year total return is 45.4% and the 5 year total return is 70.3%. This helps set the context for how recent moves compare with the stock’s multi year track record.

See our latest analysis for Babcock & Wilcox Enterprises.

At the current share price of $9.45, Babcock & Wilcox Enterprises has seen strong recent momentum, with solid short term share price gains and a very large 1 year total shareholder return that contrasts with more modest multi year totals.

If you are looking beyond BW for other ideas in a similar space, this could be a good moment to scan aerospace and defense stocks for more industrial and defense related names that fit your criteria.

After such a sharp run and with BW trading above the latest analyst price target of US$8.75, you have to ask yourself whether the stock is still undervalued or whether the market is already pricing in future growth.

Most Popular Narrative: 13.4% Overvalued

Based on the most followed narrative, Babcock & Wilcox Enterprises has a fair value estimate of $8.33, which sits below the recent $9.45 share price.

Debt paydown of the 2026 bonds, recent equity raises and pro forma net debt of about US$113.2m, or 0.8x to 1.6x targeted 2026 EBITDA, point to lower interest expense and a stronger balance sheet. This can support earnings quality and financial flexibility as the US$10b to US$12b global project pipeline converts.

Read the complete narrative.

Curious what kind of revenue path, margin lift and earnings swing need to line up for that valuation to make sense by 2029? The narrative leans on a sharp turn into profitability, a rerating to a premium earnings multiple and steady top line progress. If you want to see exactly how those moving parts fit together, the full story breaks down each step.

Result: Fair Value of $8.33 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, the narrative could quickly change if AI driven power projects are delayed, if funding becomes more expensive, or if share issuances materially dilute earnings per share.

Find out about the key risks to this Babcock & Wilcox Enterprises narrative.

Another angle on BW’s valuation

While the narrative fair value comes out at $8.33 and flags BW as overvalued at $9.45, our DCF model points to a future cash flow value of $4.42, which also suggests overvaluation but with a wider gap. The question for you is which set of assumptions feels more realistic.

Look into how the SWS DCF model arrives at its fair value.

Build Your Own Babcock & Wilcox Enterprises Narrative

If you are not on board with this view or would rather test the assumptions yourself, you can build a custom BW storyline in minutes with Do it your way.

A great starting point for your Babcock & Wilcox Enterprises research is our analysis highlighting 2 key rewards and 4 important warning signs that could impact your investment decision.

Looking for more investment ideas?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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