CW Investment Analysis Report & Stock Research, Curtiss-Wright Corp.

Ockham's Rating/Recommendation Summary

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CW Revenue

For a long time, value investors have used the current share price relative to sales per share levels as an important valuation tool. We utilize a historical weighted average methodology that treats recent years more importantly in the calculation. When looking at CW through this framework, we can see that our weighted average historical high and low Price to Sales per share ratios over the last 10 years are 1.55x and 0.94x respectively.

Utilizing this range we can see that CW’s current Price to Sales per share ratio of 0.87x is significantly below its average levels historically. In fact, with a current price of $34.55, CW is a full 30% below its average Price to Sales ratio at comparable sales levels. This is a rare occurrence and, when taken in context of the other areas of our analysis, can be a strong positive for our outlook for CW.

CW Cash Earnings

Cash Earnings is always one of the most important factors to review for a company and, more importantly, an investment in a stock. CW is significantly below its historical average multiple of Cash Earnings. Looking at the last 10 years we can get a good understanding of what investors have grown to expect from CW. For example, CW's Cash Earnings ratio per share has fluctuated between 8.82 and 14.64 over this historical timeframe. This range is based upon a proprietary weighted methodology at Ockham, but can clearly show an investor where CW is with respect to prior business periods.

So with CW's current price (latest close of $34.55) and most recent level of Cash Earnings reported, we see significant opportunity from a value perspective. At its current price level, CW is 22% below its average level of Price to Cash Earnings on a historical basis. This means that investors were willing to pay for a much higher stock price than currently for the same level of Cash in the past, on a relative basis. There are a couple of important things to remember, however. First, value doesn't exist in a vacuum. So if the market doesn't recognize this value, even a great disparity in Price to Cash Earnings cannot force an immediate stock price reaction. Second, patience is key when looking at securities that have reached these levels of Price to Cash Earnings versus their historical norms. So be patient with CW.

CW Dividends

While it is not necessary to pay an attractive dividend or a dividend at all, to receive a positive rating from Ockham, we view dividends as an additionally helpful measure in determining the future potential of any company.

In CW’s case, the estimated annual dividend is $0.32 resulting in a current dividend yield of 0.93%. Similar to our review of Sales and Cash Earnings per share, we evaluate dividend yields from CW against the historic high and low levels over the past 10 years. The highest dividend yield from CW over this period was 1.41% while the lowest dividend yield was 0.49% CW is not making us feel all that confident when their current dividend yield is below the historical median by 2.11%.