CURTISS WRIGHT CORP (CW) stock intrinsic value fair value estimate & owner earnings analysis

Curtiss-Wright makes mission-critical components for defense, nuclear power and aerospace. It has three segments: Aerospace & Industrial (sensors, actuation, industrial products), Defense Electronics (embedded computing, tactical communications) and Naval & Power (propulsion equipment for the Virginia-class and Columbia-class submarines and Ford-class carriers, reactor protection systems for commercial nuclear plants, and Navy ship repair and fleet services). In 2025 sales were $3.50 billion (up 12%), operating income was $634 million (up 20%), and backlog was $4.1 billion (up from $3.4 billion a year earlier), with about 90% due to convert to sales within 36 months. New orders of $4.05 billion exceeded sales. About 47% of sales are to the U.S. Government. A small part of the company's cash ($26 million) is held in China. How we measured earnings. We start from operating cash flow and remove swings in receivables, inventory, payables and customer advances, deduct stock compensation ($21.5 million in 2025) and deduct only the capital spending needed to maintain the business ($82 million of $90 million in 2025). Pension contributions stay in as a real cost. Because we value the business before its lenders and then subtract debt, we add back the cash interest paid (about $42 million a year). On this basis the business generated about $409 million in 2021, $342 million in 2022, $436 million in 2023, $475 million in 2024 and $557 million in 2025. Amortization of acquired intangibles ($72 million in 2025) is non-cash and added back, but we give no growth credit for future acquisitions, so a wasting asset is not treated as permanent. Capital spending now exceeds depreciation ($90 million versus $53 million), so the plant is not being under-maintained. 2020 is excluded because of the pandemic and a one-time $153 million pension contribution. Starting level. We use the middle of the last three years, $475 million a year (about $12.80 a share on 37.1 million diluted shares). This is deliberately below the 2025 figure. Growth check: actual growth in this cash flow in 2025 was 17%; our base case assumes 6% in year one, well below that. Base case: $294 a share. Growth is credited only where it is in the bag: the $4.1 billion backlog, orders running ahead of sales, and the long-running Columbia-class and Virginia-class submarine programs. Half-year 2026 sales rose to $1.84 billion from $1.68 billion. We assume 6% a year for three years, 4.5% for three, then 3.5% for four, reaching about $741 million in year ten, and hold that level afterward because the sole-source naval and nuclear content and the aftermarket work tied to ships already in service keep operating. The business is worth about $11.4 billion ($308 a share). It owes about $513 million net, leaving about $10.9 billion, or $294 a share. Bull case: $366 a share. The 2025 level of $557 million is treated as the starting point, since it has already been achieved, growing 6% for five years and 4.5% for five more, reaching about $928 million, then held. The business is worth about $14.1 billion, less $513 million net debt, leaving about $13.6 billion. Bear case: $137 a share. Cash flow drops back to $340 million, the weakest post-pandemic level (2022's $342 million), suffers a repeat of 2020's 25% commercial downturn in year two, recovers to $340 million and never grows. Reliance on Navy production and commercial nuclear programs that carry regulatory risk is the exposure. The business is worth about $5.6 billion, it owes about $513 million, leaving about $5.1 billion. Even at the low point the business earns about six times its interest bill. Debt. Borrowings are $957 million of fixed-rate senior notes averaging about 4.0% with maturities from 2026 to 2034; the $200 million 4.24% notes due in 2026 are covered by $477 million of cash at 30 June 2026. We treat $100 million of cash as needed for operations, so net borrowings are about $580 million. The low fixed rates versus a 6% benchmark are worth about $67 million to shareholders, which reduces the net debt to $513 million. What we left out: acquisitions, margin expansion, new nuclear or small-reactor projects, and any recovery in commercial aerospace, because none is contracted or a long-proven pattern we can rely on. We checked the growth assumptions against the rise in backlog from $3.4 billion to $4.1 billion. Change since our last analysis (August 2026): values rose from $99, $225 and $296 to $137, $294 and $366, mainly because we now value future cash at a 6% required return instead of 10%, measure cash before interest and subtract debt separately. The starting level is slightly lower than before. What would make this wrong: a cut in Navy submarine production, a sharp aerospace downturn, or a costly acquisition.