Intrinsic value of BWX Technologies, Inc. - BWXT

Previous Close

$52.94

  Intrinsic Value

$31.03

stock screener

  Rating & Target

sell

-41%

Previous close

$52.94

 
Intrinsic value

$31.03

 
Up/down potential

-41%

 
Rating

sell

We calculate the intrinsic value of BWXT stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 5.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  11.10
  10.49
  9.94
  9.45
  9.00
  8.60
  8.24
  7.92
  7.63
  7.36
  7.13
  6.91
  6.72
  6.55
  6.40
  6.26
  6.13
  6.02
  5.92
  5.82
  5.74
  5.67
  5.60
  5.54
  5.49
  5.44
  5.39
  5.35
  5.32
  5.29
Revenue, $m
  2,000
  2,210
  2,429
  2,659
  2,898
  3,147
  3,407
  3,676
  3,957
  4,248
  4,551
  4,866
  5,193
  5,533
  5,887
  6,255
  6,638
  7,038
  7,454
  7,888
  8,341
  8,814
  9,308
  9,823
  10,362
  10,926
  11,515
  12,132
  12,777
  13,453
Variable operating expenses, $m
  1,664
  1,834
  2,011
  2,196
  2,389
  2,590
  2,800
  3,017
  3,244
  3,479
  3,673
  3,927
  4,191
  4,465
  4,751
  5,048
  5,358
  5,680
  6,016
  6,366
  6,732
  7,113
  7,512
  7,928
  8,363
  8,818
  9,293
  9,791
  10,312
  10,857
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  1,664
  1,834
  2,011
  2,196
  2,389
  2,590
  2,800
  3,017
  3,244
  3,479
  3,673
  3,927
  4,191
  4,465
  4,751
  5,048
  5,358
  5,680
  6,016
  6,366
  6,732
  7,113
  7,512
  7,928
  8,363
  8,818
  9,293
  9,791
  10,312
  10,857
Operating income, $m
  336
  376
  418
  463
  509
  557
  607
  659
  713
  769
  878
  939
  1,002
  1,068
  1,136
  1,207
  1,281
  1,358
  1,438
  1,522
  1,609
  1,701
  1,796
  1,895
  1,999
  2,108
  2,222
  2,341
  2,465
  2,596
EBITDA, $m
  435
  481
  529
  579
  631
  685
  742
  800
  861
  925
  991
  1,059
  1,130
  1,204
  1,281
  1,362
  1,445
  1,532
  1,623
  1,717
  1,816
  1,919
  2,026
  2,138
  2,256
  2,378
  2,507
  2,641
  2,781
  2,928
Interest expense (income), $m
  7
  41
  50
  59
  68
  78
  88
  99
  110
  121
  133
  146
  159
  172
  186
  200
  215
  231
  248
  265
  282
  301
  320
  340
  361
  383
  406
  430
  455
  481
  509
Earnings before tax, $m
  294
  326
  359
  394
  431
  469
  508
  549
  592
  636
  732
  780
  830
  882
  935
  991
  1,050
  1,110
  1,174
  1,240
  1,309
  1,381
  1,456
  1,534
  1,616
  1,702
  1,792
  1,886
  1,984
  2,087
Tax expense, $m
  79
  88
  97
  106
  116
  127
  137
  148
  160
  172
  198
  211
  224
  238
  253
  268
  283
  300
  317
  335
  353
  373
  393
  414
  436
  460
  484
  509
  536
  563
Net income, $m
  215
  238
  262
  288
  315
  342
  371
  401
  432
  464
  535
  570
  606
  644
  683
  724
  766
  811
  857
  905
  955
  1,008
  1,063
  1,120
  1,180
  1,242
  1,308
  1,376
  1,448
  1,523

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  1,838
  2,031
  2,233
  2,444
  2,664
  2,893
  3,131
  3,379
  3,637
  3,905
  4,183
  4,472
  4,773
  5,085
  5,411
  5,749
  6,102
  6,469
  6,851
  7,250
  7,667
  8,101
  8,555
  9,029
  9,524
  10,042
  10,584
  11,151
  11,744
  12,365
Adjusted assets (=assets-cash), $m
  1,838
  2,031
  2,233
  2,444
  2,664
  2,893
  3,131
  3,379
  3,637
  3,905
  4,183
  4,472
  4,773
  5,085
  5,411
  5,749
  6,102
  6,469
  6,851
  7,250
  7,667
  8,101
  8,555
  9,029
  9,524
  10,042
  10,584
  11,151
  11,744
  12,365
Revenue / Adjusted assets
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
  1.088
Average production assets, $m
  668
  738
  811
  888
  968
  1,051
  1,138
  1,228
  1,322
  1,419
  1,520
  1,625
  1,734
  1,848
  1,966
  2,089
  2,217
  2,351
  2,490
  2,635
  2,786
  2,944
  3,109
  3,281
  3,461
  3,649
  3,846
  4,052
  4,268
  4,493
Working capital, $m
  158
  175
  192
  210
  229
  249
  269
  290
  313
  336
  360
  384
  410
  437
  465
  494
  524
  556
  589
  623
  659
  696
  735
  776
  819
  863
  910
  958
  1,009
  1,063
Total debt, $m
  925
  1,091
  1,264
  1,445
  1,634
  1,830
  2,035
  2,248
  2,469
  2,699
  2,937
  3,185
  3,443
  3,712
  3,991
  4,281
  4,584
  4,899
  5,227
  5,569
  5,926
  6,299
  6,689
  7,095
  7,520
  7,965
  8,429
  8,916
  9,425
  9,957
Total liabilities, $m
  1,577
  1,742
  1,916
  2,097
  2,285
  2,482
  2,687
  2,899
  3,120
  3,350
  3,589
  3,837
  4,095
  4,363
  4,642
  4,933
  5,235
  5,550
  5,878
  6,221
  6,578
  6,951
  7,340
  7,747
  8,172
  8,616
  9,081
  9,567
  10,076
  10,609
Total equity, $m
  261
  288
  317
  347
  378
  411
  445
  480
  516
  554
  594
  635
  678
  722
  768
  816
  866
  919
  973
  1,030
  1,089
  1,150
  1,215
  1,282
  1,352
  1,426
  1,503
  1,583
  1,668
  1,756
Total liabilities and equity, $m
  1,838
  2,030
  2,233
  2,444
  2,663
  2,893
  3,132
  3,379
  3,636
  3,904
  4,183
  4,472
  4,773
  5,085
  5,410
  5,749
  6,101
  6,469
  6,851
  7,251
  7,667
  8,101
  8,555
  9,029
  9,524
  10,042
  10,584
  11,150
  11,744
  12,365
Debt-to-equity ratio
  3.550
  3.780
  3.990
  4.160
  4.320
  4.460
  4.580
  4.680
  4.780
  4.870
  4.950
  5.020
  5.080
  5.140
  5.190
  5.240
  5.290
  5.330
  5.370
  5.410
  5.440
  5.480
  5.510
  5.530
  5.560
  5.590
  5.610
  5.630
  5.650
  5.670
Adjusted equity ratio
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142
  0.142

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  215
  238
  262
  288
  315
  342
  371
  401
  432
  464
  535
  570
  606
  644
  683
  724
  766
  811
  857
  905
  955
  1,008
  1,063
  1,120
  1,180
  1,242
  1,308
  1,376
  1,448
  1,523
Depreciation, amort., depletion, $m
  100
  105
  110
  116
  122
  128
  135
  141
  148
  155
  113
  120
  128
  137
  146
  155
  164
  174
  184
  195
  206
  218
  230
  243
  256
  270
  285
  300
  316
  333
Funds from operations, $m
  314
  343
  373
  404
  437
  470
  506
  542
  580
  620
  647
  690
  734
  780
  828
  878
  931
  985
  1,041
  1,100
  1,162
  1,226
  1,293
  1,363
  1,436
  1,513
  1,593
  1,677
  1,764
  1,856
Change in working capital, $m
  16
  17
  17
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  34
  36
  37
  39
  41
  43
  45
  47
  49
  51
  53
Cash from operations, $m
  299
  326
  355
  386
  418
  451
  485
  521
  558
  597
  623
  665
  708
  754
  801
  849
  900
  953
  1,008
  1,066
  1,126
  1,189
  1,254
  1,322
  1,394
  1,468
  1,546
  1,628
  1,713
  1,803
Maintenance CAPEX, $m
  -45
  -49
  -55
  -60
  -66
  -72
  -78
  -84
  -91
  -98
  -105
  -113
  -120
  -128
  -137
  -146
  -155
  -164
  -174
  -184
  -195
  -206
  -218
  -230
  -243
  -256
  -270
  -285
  -300
  -316
New CAPEX, $m
  -66
  -70
  -73
  -77
  -80
  -83
  -87
  -90
  -94
  -97
  -101
  -105
  -109
  -114
  -118
  -123
  -128
  -133
  -139
  -145
  -151
  -158
  -165
  -172
  -180
  -188
  -197
  -206
  -216
  -226
Cash from investing activities, $m
  -111
  -119
  -128
  -137
  -146
  -155
  -165
  -174
  -185
  -195
  -206
  -218
  -229
  -242
  -255
  -269
  -283
  -297
  -313
  -329
  -346
  -364
  -383
  -402
  -423
  -444
  -467
  -491
  -516
  -542
Free cash flow, $m
  188
  207
  227
  249
  272
  296
  321
  346
  373
  401
  417
  447
  479
  511
  545
  581
  617
  656
  695
  736
  779
  824
  871
  920
  971
  1,024
  1,079
  1,137
  1,198
  1,261
Issuance/(repayment) of debt, $m
  158
  165
  173
  181
  189
  197
  205
  213
  221
  230
  239
  248
  258
  268
  279
  290
  302
  315
  328
  342
  357
  373
  389
  407
  425
  444
  465
  486
  509
  533
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  158
  165
  173
  181
  189
  197
  205
  213
  221
  230
  239
  248
  258
  268
  279
  290
  302
  315
  328
  342
  357
  373
  389
  407
  425
  444
  465
  486
  509
  533
Total cash flow (excl. dividends), $m
  346
  372
  401
  430
  461
  492
  525
  559
  595
  631
  656
  696
  737
  780
  824
  871
  920
  971
  1,024
  1,079
  1,137
  1,197
  1,260
  1,326
  1,396
  1,468
  1,544
  1,623
  1,707
  1,794
Retained Cash Flow (-), $m
  -25
  -27
  -29
  -30
  -31
  -33
  -34
  -35
  -37
  -38
  -40
  -41
  -43
  -44
  -46
  -48
  -50
  -52
  -54
  -57
  -59
  -62
  -64
  -67
  -70
  -74
  -77
  -80
  -84
  -88
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  320
  345
  372
  400
  429
  460
  491
  524
  558
  593
  616
  654
  694
  735
  778
  823
  870
  918
  969
  1,022
  1,078
  1,135
  1,196
  1,259
  1,325
  1,395
  1,467
  1,543
  1,622
  1,706
Discount rate, %
  9.50
  9.98
  10.47
  11.00
  11.55
  12.12
  12.73
  13.37
  14.04
  14.74
  15.47
  16.25
  17.06
  17.91
  18.81
  19.75
  20.74
  21.77
  22.86
  24.01
  25.21
  26.47
  27.79
  29.18
  30.64
  32.17
  33.78
  35.47
  37.24
  39.10
PV of cash for distribution, $m
  292
  285
  276
  264
  249
  231
  212
  192
  171
  150
  127
  107
  90
  73
  59
  46
  35
  26
  19
  14
  10
  6
  4
  3
  2
  1
  1
  0
  0
  0
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

BWX Technologies, Inc. is a manufacturer of nuclear components and a service provider. The Company's businesses focus on the design, engineering and manufacture of precision naval nuclear components, reactors and nuclear fuel for the United States Government. Its segments include Nuclear Operations, Technical Services, Nuclear Energy and Other. It provides uranium processing and environmental site restoration services, as well as a range of products and services to customers in the nuclear power industry. Nuclear Operations engineers, designs and manufactures precision naval nuclear components and reactors for the United States Department of Energy/National Nuclear Security Administration's Naval Nuclear Propulsion Program. Technical Services provides various services to the United States Government. Nuclear Energy designs, licenses, manufactures and delivers commercial nuclear steam generators, pressure vessels, reactor components, heat exchangers and other auxiliary equipment.

FINANCIAL RATIOS  of  BWX Technologies, Inc. (BWXT)

Valuation Ratios
P/E Ratio 28.7
Price to Sales 3.4
Price to Book 35
Price to Tangible Book
Price to Cash Flow 21.9
Price to Free Cash Flow 28.1
Growth Rates
Sales Growth Rate 9.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -22.1%
Cap. Spend. - 3 Yr. Gr. Rate -4.6%
Financial Strength
Quick Ratio 5
Current Ratio 0.9
LT Debt to Equity 332%
Total Debt to Equity 350%
Interest Coverage 38
Management Effectiveness
Return On Assets 12.7%
Ret/ On Assets - 3 Yr. Avg. 6.8%
Return On Total Capital 29.7%
Ret/ On T. Cap. - 3 Yr. Avg. 15.4%
Return On Equity 88%
Return On Equity - 3 Yr. Avg. 37.1%
Asset Turnover 1
Profitability Ratios
Gross Margin 30.7%
Gross Margin - 3 Yr. Avg. 26.4%
EBITDA Margin 20.3%
EBITDA Margin - 3 Yr. Avg. 17.3%
Operating Margin 15.5%
Oper. Margin - 3 Yr. Avg. 10.6%
Pre-Tax Margin 16.6%
Pre-Tax Margin - 3 Yr. Avg. 11.5%
Net Profit Margin 11.8%
Net Profit Margin - 3 Yr. Avg. 7.7%
Effective Tax Rate 28.4%
Eff/ Tax Rate - 3 Yr. Avg. 23.6%
Payout Ratio 20.2%

BWXT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BWXT stock intrinsic value calculation we used $1800 million for the last fiscal year's total revenue generated by BWX Technologies, Inc.. The default revenue input number comes from 0001 income statement of BWX Technologies, Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our BWXT stock valuation model: a) initial revenue growth rate of 11.1% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 9.5%, whose default value for BWXT is calculated based on our internal credit rating of BWX Technologies, Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of BWX Technologies, Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of BWXT stock the variable cost ratio is equal to 83.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for BWXT stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for BWX Technologies, Inc..

Corporate tax rate of 27% is the nominal tax rate for BWX Technologies, Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the BWXT stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for BWXT are equal to 33.4%.

Life of production assets of 13.5 years is the average useful life of capital assets used in BWX Technologies, Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for BWXT is equal to 7.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $235.662 million for BWX Technologies, Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 94.939 million for BWX Technologies, Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of BWX Technologies, Inc. at the current share price and the inputted number of shares is $5.0 billion.

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