BWX (NYSE:BWXT) Beats Expectations in Strong Q1

Aerospace and defense company BWX (NYSE:BWXT) reported Q1 CY2025 results topping the market’s revenue expectations, with sales up 13% year on year to $682.3 million. On the other hand, the company’s full-year revenue guidance of $3 billion at the midpoint came in 0.9% below analysts’ estimates. Its non-GAAP profit of $0.91 per share was 19% above analysts’ consensus estimates.

Is now the time to buy BWX? Find out by accessing our full research report, it’s free.

“We had a solid start to 2025 with financial results that were ahead of expectations, driven by an increased pace of work and good operational performance," said Rex D. Geveden, president and chief executive officer.

Company Overview

Contributing components and materials to the famous Manhattan Project in the 1940s, BWX (NYSE:BWXT) is a manufacturer and service provider of nuclear components and fuel for government and commercial industries.

Sales Growth

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, BWX grew its sales at a mediocre 6.6% compounded annual growth rate. This fell short of our benchmark for the industrials sector and is a poor baseline for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. BWX’s annualized revenue growth of 10.7% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

BWX also breaks out the revenue for its most important segments, Government Operations and Commercial Operations, which are 0.1% and 0% of revenue. Over the last two years, BWX’s Government Operations revenue (public sector sales) averaged 3.2% year-on-year declines while its Commercial Operations revenue (private sector sales) averaged 3% declines.

This quarter, BWX reported year-on-year revenue growth of 13%, and its $682.3 million of revenue exceeded Wall Street’s estimates by 5.1%.

Looking ahead, sell-side analysts expect revenue to grow 12.7% over the next 12 months, an improvement versus the last two years. This projection is noteworthy and implies its newer products and services will fuel better top-line performance.

Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.

Operating Margin

BWX has been an efficient company over the last five years. It was one of the more profitable businesses in the industrials sector, boasting an average operating margin of 15.4%.

Looking at the trend in its profitability, BWX’s operating margin decreased by 2.4 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

In Q1, BWX generated an operating profit margin of 14.2%, down 1.2 percentage points year on year. This reduction is quite minuscule and indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

BWX’s EPS grew at a weak 3.7% compounded annual growth rate over the last five years, lower than its 6.6% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.

Diving into the nuances of BWX’s earnings can give us a better understanding of its performance. As we mentioned earlier, BWX’s operating margin declined by 2.4 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For BWX, its two-year annual EPS growth of 5.3% was higher than its five-year trend. Accelerating earnings growth is almost always an encouraging data point.

In Q1, BWX reported EPS at $0.91, up from $0.76 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects BWX’s full-year EPS of $3.49 to grow 3.3%.

Key Takeaways from BWX’s Q1 Results

We were impressed by how significantly BWX blew past analysts’ EBITDA expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. On the other hand, its Government Operations revenue missed and its full-year revenue guidance fell slightly short of Wall Street’s estimates. Overall, we think this was still a solid quarter with some key areas of upside. The stock traded up 2.9% to $115.25 immediately after reporting.

Indeed, BWX had a rock-solid quarterly earnings result, but is this stock a good investment here? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.