Gordon Tam, CFA
CFA, value, www.top10invest.com, long only

Babcock & Wilcox: A Bright Outlook In 2015

At first glance, Babcock & Wilcox Co (BWC) trades close to 52 weeks low, the forward P/E multiple of BWC is 10.88x, and the EV/EBITDA ratio is 5.67x. All metrics indicate value for prospective investors. Upon further analysis, I also find that there is a bright 2015 outlook for the depressed Power Generation Group "PGG", expecting growth of 10-20% in 2015. Combined with a self-help restructuring initiative of 2-3% margin improvement and a sizable repurchase program, I conservatively calculate that BWC should generate about 10% returns for its shareholders over the next year.

Business Overview

BWC consists of several segments, including Power Generation Group "PGG", Nuclear Energy, Nuclear Operations, Technical Services, and mPower: (more details of each segment are shown

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