Babcock & Wilcox Enterprises, Inc. (NYSE: BW)

Sector: Industrials Industry: Specialty Industrial Machinery CIK: 0001630805
Market Cap 889.49 Mn
P/B -3.83
P/E -7.21
P/S 1.65
ROIC (Qtr) 17.99
Div Yield % 0.00
Rev 1y % (Qtr) -2.37
Total Debt (Qtr) 463.51 Mn
Debt/Equity (Qtr) -2.00
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About

Babcock & Wilcox Enterprises, Inc., often referred to as BW, is a global company with over 155 years of experience in the field of renewable, environmental, and thermal technologies. Its operations span across three segments: Babcock & Wilcox Renewable, Babcock & Wilcox Environmental, and Babcock & Wilcox Thermal. The Babcock & Wilcox Renewable segment is a pioneer in the development of hydrogen generation technology, BrightLoopTM, which plays a significant role in achieving global climate goals by decarbonizing industrial and utility steam and...

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Investment thesis

Bull case

  • Tangible assets of 588.48M provide exceptional 7.41x coverage of deferred revenue 79.44M, showing strong service capability backing.
  • Cash position of 189.92M provides exceptional 3063.23x coverage of minority interest expenses 62000, indicating strong liquidity.
  • Robust tangible asset base of 588.48M provides 7.47x coverage of working capital 78.75M, indicating strong operational backing.
  • Operating cash flow of (88.38M) provides strong 32.13x coverage of operating expenses (2.75M), showing operational efficiency.
  • Retained earnings of (1.70B) represent substantial 7.33x of equity (232.21M), indicating strong internal capital generation.

Bear case

  • Operating cash flow of (88.38M) barely covers its investment activities of 204.37M, with a coverage ratio of -0.43, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Cash reserves of 189.92M provide limited coverage of acquisition spending of 220.74M, which is 0.86x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of (88.38M) provides insufficient coverage of deferred revenue obligations of 79.44M, which is -1.11x, raising concerns about future service delivery capabilities.
  • High receivables of 172.42M relative to inventory of 64.56M (2.67 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • The company's operating cash flow of (88.38M) shows concerning coverage of stock compensation expenses of 3.16M, with a -28 ratio indicating potential earnings quality issues.

Segments Breakdown of Revenue (2024)

Geographical Breakdown of Revenue (2024)

Peer comparison

Companies in the Specialty Industrial Machinery
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 GEV GE Vernova Inc. 224.93 Bn 194.57 6.14 0.00 Bn
2 ETN Eaton Corp plc 153.13 Bn 38.99 5.75 11.22 Bn
3 PH Parker-Hannifin Corp 135.87 Bn 165.29 12.09 9.87 Bn
4 EMR Emerson Electric Co 111.68 Bn 47.10 4.65 13.41 Bn
5 ITW Illinois Tool Works Inc 86.68 Bn 28.27 5.40 8.97 Bn
6 CMI Cummins Inc 82.13 Bn 28.89 2.44 7.55 Bn
7 AME Ametek Inc/ 53.79 Bn 36.34 7.27 2.28 Bn
8 ROK Rockwell Automation, Inc 43.80 Bn 44.24 5.11 3.68 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.99 2.28
EV to Cash from Ops. EV/CFO -14.79 37.14
EV to Debt EV to Debt 2.82 34.39
EV to EBIT EV/EBIT -24.04 27.71
EV to EBITDA EV/EBITDA 22.29 25.34
EV to Free Cash Flow [EV/FCF] EV/FCF -12.81 133.36
EV to Market Cap EV to Market Cap 1.47 1.04
EV to Revenue EV/Rev 2.42 39.88
Price to Book Value [P/B] P/B -3.83 6.22
Price to Earnings [P/E] P/E -7.21 143.63
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) -8.30 2.57
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 15.73
Dividend per Basic Share Div per Share (Qtr) 0.00 0.91
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 82.53
Interest Coverage Int. cover (Qtr) -1.33 12.34
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -45.74 -45.99
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 102.06 118.48
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 10.01
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -568.61 -283.03
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 124.99 -36.87
EBIT Growth (1y) % EBIT 1y % (Qtr) -648.88 -80.72
EBT Growth (1y) % EBT 1y % (Qtr) -104.20 -120.93
EPS Growth (1y) % EPS 1y % (Qtr) -59.04 -39.22
FCF Growth (1y) % FCF 1y % (Qtr) -4.78 85.55
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 24.53 0.87
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.82 0.62
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.10
Cash Ratio Cash Ratio (Qtr) 0.47 3.01
Current Ratio Curr Ratio (Qtr) 1.20 4.97
Debt to Equity Ratio Debt/Equity (Qtr) -2.00 0.38
Interest Cover Ratio Int Coverage (Qtr) -1.33 12.34
Times Interest Earned Times Interest Earned (Qtr) -1.33 12.34
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -6.70 -7,291.27
EBIT Margin % EBIT Margin % (Qtr) -10.06 -7,413.30
EBT Margin % EBT Margin % (Qtr) -17.61 -9,015.79
Gross Margin % Gross Margin % (Qtr) 26.80 -32.61
Net Profit Margin % Net Margin % (Qtr) -22.80 -7,962.06