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Is BWX Technologies, Inc. (NYSE:BWXT) Potentially Undervalued?

Simply Wall St

BWX Technologies, Inc. (NYSE:BWXT), which is in the aerospace & defense business, and is based in United States, received a lot of attention from a substantial price increase on the NYSE over the last few months. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Today I will analyse the most recent data on BWX Technologies’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for BWX Technologies

What's the opportunity in BWX Technologies?

According to my valuation model, BWX Technologies seems to be fairly priced at around 14.11% above my intrinsic value, which means if you buy BWX Technologies today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $51.26, then there isn’t really any room for the share price grow beyond what it’s currently trading. In addition to this, BWX Technologies has a low beta, which suggests its share price is less volatile than the wider market.

What kind of growth will BWX Technologies generate?

NYSE:BWXT Past and Future Earnings, September 26th 2019

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. BWX Technologies’s earnings over the next few years are expected to increase by 51%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has already priced in BWXT’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on BWXT, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on BWX Technologies. You can find everything you need to know about BWX Technologies in the latest infographic research report. If you are no longer interested in BWX Technologies, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.