We initiate on CW at Sell, $373 PT. Curtiss-Wright Corporation (CW) specializes as a critical hardware & software engineering partner for defense, aerospace, industrial, and nuclear power end- markets across the globe. While mgmt credibility on margin expansion & scale of record $3.6bn backlog inject heft into the NT growth story, we see the magnitude of dislocation in multiples as pointing to an imminent reckoning. CW trades at 24x NTM EV/EBITDA, with our above-consensus EBITDA estimates embedding through-by-FY26E op. leverage & superior mix in Defense Electronics. However, this premium to the historical median appears increasingly out of step with a macro regime increasingly defined by “higher-for-longer real rates” and continued liquidity withdrawal in a manufacturing cycle at best limping ALONG (ISM confirms contraction into mid-2025). Investors appear to be underwriting a perpetual geopolitical risk premium, despite the traditional dichotomy of multi-year topline visibility & momentary policy tailwinds versus unrelenting multiple mean reversion. Even if defense & nuclear outperform, segments exposed to industrial malaise & tariff drag range bound further revisions, with private-market and peer valuations several turns below here. While we acknowledge any upside surprise on defense appropriations or nuclear wins could puncture the thesis, the balance of valuation skew is overwhelmingly negative; downside compression vs upside catalysts for a stock priced for perfection sailing into headwinds. At these levels, risk far outweighs the reward regardless of business-level execution.
Markets are Challenged.
We view Curtiss-Wright’s current valuation premium as disconnected from underlying mean reversion risk and unsustainable at current levels. Shares recently traded at 22–24x forward P/E, a notable