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3 Reasons CW Has Explosive Upside Potential

CW Cover Image

What a fantastic six months it’s been for Curtiss-Wright. Shares of the company have skyrocketed 52%, hitting $726.41. This was partly due to its solid quarterly results, and the run-up might have investors contemplating their next move.

Following the strength, is CW a buy right now? Or is the market overestimating its value? Find out in our full research report, it’s free.

Why Are We Positive On Curtiss-Wright?

Formed from a merger of 12 companies, Curtiss-Wright (NYSE: CW) provides a range of products and services to the aerospace, industrial, electronic, and maritime industries.

1. Long-Term Revenue Growth Shows Momentum

Examining a company’s long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, Curtiss-Wright’s 8.8% annualized revenue growth over the last five years was decent. Its growth was slightly above the average industrials company and shows its offerings resonate with customers.

Curtiss-Wright Quarterly Revenue

2. Operating Margin Reveals a Well-Run Organization

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Curtiss-Wright has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 16.9%.

Curtiss-Wright Trailing 12-Month Operating Margin (GAAP)

3. Outstanding Long-Term EPS Growth

Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.

Curtiss-Wright’s EPS grew at a remarkable 14% compounded annual growth rate over the last five years, higher than its 8.8% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Curtiss-Wright Trailing 12-Month EPS (Non-GAAP)

Final Judgment

These are just a few reasons why we think Curtiss-Wright is a great business, and with the recent surge, the stock trades at 46.6× forward P/E (or $726.41 per share). Is now the time to buy despite the apparent froth? See for yourself in our in-depth research report, it’s free.

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