Curtiss-Wright Research from a Long-Term Owner's Perspective

How this company actually makes money: It does not make money mainly by "selling volume." It makes money by selling high-reliability, heavily certified, high-switching-cost products and services on critical platforms. A&I provides sensors, controls, electromechanical actuation, surface treatment, and related offerings. Defense Electronics mainly sells embedded computing, tactical communications, avionics, and flight recording. Naval & Power covers pumps, valves, controls, and services in naval nuclear propulsion equipment, commercial nuclear power, and process industries. In its 10-K, the company repeatedly emphasizes that many products are used in must-not-fail safety-critical applications and are deeply embedded in customer processes.

Who the customers are, and whether revenue is stable: Customers include U.S. government agencies, defense prime contractors, commercial aerospace OEMs, and customers in nuclear power, process industries, and manufacturing. The company has hundreds of customers, and in 2025, 2024, and 2023, no single customer accounted for more than 10% of revenue. From an end-use perspective, however, government-related revenue is substantial. In 2025, U.S. government and foreign government end-use revenue accounted for 58% of total revenue, and revenue involving U.S. government agencies and prime contractors alone accounted for about 47%. This means the company is not dependent on any single customer, but it depends meaningfully on government budgets and the defense-program ecosystem. On the other hand, total new orders in 2025 were $4.054 billion, above revenue of $3.498 billion, and year-end backlog was $4.076 billion. In Q1 2026, new orders were about $1.2 billion, with book-to-bill of 1.3x, indicating that short- to medium-term revenue visibility remains good.

Cost structure and predictability: This is an engineered manufacturing business with "not necessarily spectacular gross margins, but good operating margins and cash-flow quality." Its main costs are materials, manufacturing, engineering R&D, selling expenses, and administrative expenses. Because a meaningful share of products are long-cycle projects, the company holds receivables, contract assets, and inventory, while also using milestone billing, progress payments, and deferred revenue to offset working-capital pressure. The company states clearly in its 10-K that most long-term contracts allow multiple billings as projects progress, reducing working-capital needs. My understanding is: this is not an asset-light, highly predictable SaaS business, but within high-end industrials and defense, it is already quite predictable.

Industry stage and long-term demand: If the company is broken into its three businesses, they sit in different cycles. Defense and naval nuclear propulsion are more like long-cycle, budget-driven but generally steadily growing businesses. Commercial nuclear power has maintenance demand from the existing fleet plus incremental opportunities from advanced reactors. Commercial aerospace and general industrials are more cyclical, but long-term commercial aerospace demand is still supported by passenger-traffic growth. The FAA's FY2025-2045 forecast expects U.S. commercial aviation activity to continue growing over the long term. Global nuclear construction plans as of April 2026 show 75+ reactors under construction worldwide and about 120 planned reactors. Curtiss-Wright itself also set targets at its 2024 Investor Day for organic revenue CAGR >5%, EPS CAGR >10%, and FCF conversion >105% for 2024-2026, and raised full-year guidance after its Q1 2026 report.

Main competitors and industry position: Strictly speaking, it is hard to find a single competitor that perfectly maps to Curtiss-Wright, because the company spans defense electronics, embedded computing, naval nuclear propulsion, commercial nuclear services, aerospace actuation, surface treatment, and several other niches. For capital-market comparables, I would place it next to HEICO, Woodward, Crane, TransDigm, and RBC Bearings, companies with strong niche positions, high engineering barriers, and good positions in the value chain. But Curtiss-Wright's own combination of naval nuclear propulsion + commercial nuclear power + defense electronics is somewhat scarce. The company says it has competitive positions in most key markets and noted in its 2024 10-K that its defense business covers 400+ platforms and 3,000+ programs. My inference: it is not an "industry overlord," but it is likely a strong player built from a portfolio of niche advantages.

Would I be willing to hold this business if the stock market closed for 5 years: As a business, yes; at the current price, no. If you owned this company at a reasonable price, not checking the stock for five years would probably be fine. If you buy in the current high-valuation range, the risk you are really bearing is not operating risk, but valuation-compression risk. This is the core of value investing's idea that "a good business does not equal a good entry point."

Business understandability score: 4/5.

Industry attractiveness score: 4/5.

Moat and Management

Start with the moat. My conclusion is not "an extremely wide moat," but "multiple above-average moats stacked together, creating a solid but not unshakeable composite moat."

Fact: In its 10-K, the company emphasizes that its products have long been used on high-performance platforms and in critical applications, with many products serving must-not-fail scenarios. The company also believes it has competitive positions in most key A&D and commercial end markets, based on engineering and technology leadership, precision manufacturing, and long-term customer relationships. For the naval nuclear propulsion business, the company has publicly stated that it has supplied critical products for every U.S. Navy nuclear submarine and aircraft carrier for more than sixty years, and it repeatedly mentioned Columbia-class, Virginia-class, Ford-class, and other programs in its 2024-2025 annual reports. In commercial nuclear power, it serves the existing fleet and is explicitly positioning for next-generation advanced reactors.

Inference: Curtiss-Wright's most important moat is not a single extreme advantage. It is the combination of four elements: high failure cost, long certification cycles, embedded installed platforms, and continuity in aftermarket and upgrades. Even when competitors have comparable technology, they often need years of validation, large upfront investment, and customer onboarding time before they can win orders. In naval nuclear propulsion, defense electronics, and nuclear equipment in particular, these barriers are usually not something that can be copied "immediately with money"; they require "money + time + the risk of failed validation." My judgment is that this moat is currently stable to slightly widening, because defense-electronics standardized open architectures such as MOSA create some substitution opportunities, while platform refreshes, advanced nuclear power, and retrofit upgrades also open more content opportunities for the company.

Resilience under inflation and recession: In its 2021 and 2024 annual reports, the company clearly said that historically, increases in raw-material and labor costs could mostly be offset through lean improvements or pricing. Some contracts themselves allow inflation pass-through, while other contracts rely on active price negotiations. The 2024 10-K also noted that its defense business has grown faster than the average U.S. defense budget growth rate over the past 20 years, through multiple cycles and government changes. My understanding: it has some pricing power, but not unlimited pricing power. It is more resilient in downturns than a purely cyclical industrial company, but less resilient than a true consumer monopoly or software subscription business.

Now look at management and capital allocation.

Fact: The company's 2026 proxy shows that CEO Lynn M. Bamford held about 65,738 shares, while all directors and executives together held about 189,994 shares, representing less than 1% of shares outstanding. At the same time, governance terms are relatively standard and sound: no NEO employment agreements, prohibitions on executive hedging/pledging/short selling of company stock, a clawback policy, use of an independent compensation consultant, and relatively strict ownership requirements. In 2025, shareholder Say-on-Pay support exceeded 92%.

Opinion: This means I view the "integrity/governance" dimension of management as somewhat positive; but on the dimension of "being deeply aligned with shareholders like business owners," I view it as neutral. In other words, this is more like a well-governed professional-manager company than an owner-operator company where management has a heavy personal stake and is strongly tied to outside shareholders. For conservative value investors, that is not a fatal flaw, but it does reduce my tolerance for capital-allocation mistakes.

Capital allocation record: In 2025, the company completed no new acquisitions. In 2024, it completed two acquisitions for total consideration of about $235 million. In 2025, the company paid dividends of about $35 million, repurchased about $465 million of stock, and repaid $90 million of maturing debt. In 2024, dividends were about $32 million, and buybacks were about $250 million. At its 2024 Investor Day, the company explicitly emphasized an "efficient and disciplined capital allocation framework." That is a positive.

But I need to add a value investor's reservation: Buybacks are not automatically excellent capital allocation; price matters. In 2024, the company repurchased about 766,000 shares for $250 million, implying an average price of roughly $326 per share. In 2025, it repurchased about 934,000 shares for $465 million, implying an average price of roughly $498 per share. With hindsight, those buybacks have "made money" because the stock is higher now. But under value-investing logic, what truly matters is whether the repurchases were made at a sufficient discount to intrinsic value, not whether the stock later kept rising. Based on my current estimate of intrinsic value, I cannot call these buybacks "clearly bargain purchases." So my assessment of capital allocation is: generally rational, but not outstanding.

Moat strength score: 4/5.

Management and capital allocation score: 3.5/5.

Financial Quality

First, lay out the most important five-year data. In the table below, revenue, operating income, net income, operating cash flow, capital expenditures, and diluted shares come from the company's 10-K filings. Operating margin, net margin, FCF, and FCF conversion are calculated from the original data, using Operating income / Sales, Net income / Sales, CFO - Capex, and FCF / Net income, respectively.

Source note: 2021-2022 data come from the 2022 10-K; 2023-2024 data come from the 2024 10-K; 2025 data come from the 2025 10-K. Some ratios in the table are calculated from the original disclosures.

Fact: From 2021 to 2025, revenue grew from $2.506 billion to $3.498 billion, a four-year CAGR of about 8.7%. Operating margin rose from 15.3% to 18.1%. Net income grew from $267 million to $484 million. Diluted shares declined from 41.999 million shares in 2020 to 37.631 million shares in 2025, a five-year decline of about 10.4%. This shows that per-share value growth over the past five years has not relied only on revenue expansion; it also depended on margin improvement and buybacks shrinking the share count.

Matching between operating cash flow and earnings: In 2022, operating cash flow was only $295 million, clearly below net income, mainly due to higher inventory purchases, lower advances, and legal and working-capital factors. But in 2023-2025, CFO recovered to $448 million, $544 million, and $643 million, respectively, and FCF conversion returned to above 100%. My conclusion: the company's earnings are largely real cash earnings, not just accounting earnings. They are affected by working-capital fluctuations from long-cycle contracts, but the company has not shown the pattern of "needing more and more cash as it grows." Instead, the past three years look more like "revenue growth, margin improvement, and cash flow scaling together."

Balance sheet: At year-end 2025, the company had total assets of $5.221 billion and total liabilities of $2.688 billion, with liabilities/assets of about 51.5%. Total debt, net, was about $958 million, cash was $371 million, and net debt was about $587 million. Based on 2025 EBIT of $634 million and depreciation and amortization of $125 million, 2025 EBITDA was about $758 million, putting net debt/EBITDA at about 0.77x and interest coverage at about 14.7x. The company also had about $725 million of unused revolving credit capacity at year-end 2025. At the end of Q1 2026, unused capacity was still about $721 million, and management said it could incur about $2.9 billion of additional debt without violating debt covenants. This means the company is not unlevered, but it is clearly not fragile.

Working-capital quality: In 2025, net receivables rose from $835 million to $932 million, and inventory rose from $541 million to $615 million, which appears to have consumed cash. But payables and accrued expenses, and deferred revenue also increased over the same period, with deferred revenue rising from $459 million to $561 million. My understanding: this is a typical cash-flow profile for a long-cycle contract industrial company. It holds more contract assets, inventory, and pre-positioned supply, but also receives more advances and staged billings. As long as order quality and project execution remain stable, this working-capital structure is manageable. If projects are delayed, costs overrun, or contracts are canceled, working capital can quickly become a source of risk.

Accounting and internal-control risk: So far, I have not seen obvious signs of financial fraud, aggressive accounting, or internal-control deficiencies. Deloitte's audit report and management's assessment both concluded that internal control was effective at year-end 2025, with no disclosed material weakness; 2024 and 2022 had the same effective conclusions. The issue to watch is not "obvious fraud," but the inherent risk in this type of company: long-term contract estimates, recovery of contract assets, and cost estimates on fixed-price projects. In 2025, unbilled receivables still stood at $412 million, which by itself requires investors to keep tracking project execution.

My financial-quality judgment: Over the past five years, this company has shown a relatively uncommon combination: steady revenue growth, rising margins, improving free cash flow, moderate leverage, and a declining share count. From a "business quality" perspective, I am willing to give it a high score. From the perspective of "can I earn a high return buying at the current price," strong financials do not automatically offset overvaluation.

Owner Earnings and Valuation

Owner Earnings

Fact: In 2025, net income was $484 million, depreciation and amortization were $125 million, operating cash flow was $643 million, and capex was $90 million. In Q1 2026, net income was $128 million, operating cash flow was a net outflow of $6 million, and capex was $12 million. Q1 is a common seasonal working-capital draw period for this type of industrial company.

Conservative Owner Earnings estimate:

• Fact basis: The company has not separately disclosed maintenance capital expenditures, so "maintenance vs. growth" cannot be precisely separated.

• Assumption: I use total capital expenditures as a conservative substitute for maintenance capital expenditures.

• Inference: The conservative lower bound for 2025 owner earnings is therefore approximately operating cash flow - total capex = $554 million. If the roughly $37.05 million improvement in Q1 2026 free cash flow versus Q1 2025 is included, rough TTM Owner Earnings can be estimated at about $590 million. This is higher than net income, indicating that the company's real distributable cash capability is at least not weaker than accounting earnings, and may be slightly higher.

How high a valuation the market is assigning today: As of June 3, 2026, the stock price was about $769.41, and market capitalization was about $28.51 billion. Using my estimated TTM Owner Earnings of about $590 million, equity value corresponds to about 48x Owner Earnings. Using TTM net income of roughly $511 million, after full-year 2025 net income plus a Q1 rolling adjustment, it corresponds to about 56x TTM P/E. Management raised its full-year adjusted EPS guidance in May 2026 to $14.90-15.30. At the midpoint of $15.10, the current forward earnings yield is only about 2.0%. For a high-quality industrial company, this is not cheap; it is very expensive.

Intrinsic Value Estimate

For the three valuation methods below, I separate "facts" and "assumptions."

Discounted Owner Earnings Method

Fact basis: The conservative lower bound for 2025 Owner Earnings is about $554 million. The company's 2026 free cash flow guidance is $580-600 million, and it stated that 2026 capital expenditures would be about $25 million higher than in 2025. This means the company still has strong confidence in 2026 operating cash flow.

Assumption: I use $590 million as an approximate starting point and discount 10 years of equity cash flows.

• Conservative scenario: 5% growth for the first 5 years, 3% for the next 5 years, 10% discount rate, and 3% terminal growth.

• Base scenario: 7% growth for the first 5 years, 4% for the next 5 years, 9% discount rate, and 3% terminal growth.

• Optimistic scenario: 9% growth for the first 5 years, 5% for the next 5 years, 8.5% discount rate, and 3.5% terminal growth. All of the above are assumptions, not facts.

Inference: Even if I grant generous long-term growth and a lower discount rate, intrinsic value is still far below the current share price. To justify a price around $769 today, the market is effectively requiring Curtiss-Wright to keep producing earnings growth close to that of a "premium compounder" for a long time and to sustain a very high valuation premium. For an industrial/defense company, that is a demanding bar. Conclusion: Based on DCF, my ranges are:

• Conservative intrinsic value range: $220-280

• Fair intrinsic value range: $300-380

• Optimistic intrinsic value range: $420-520 Relative to the current price, the current market price is roughly 100%-155% above my fair range and about 50%-80% above my optimistic range.

Relative Valuation Method

I do not want to make the mistake of saying "peers are expensive, therefore this is not expensive." The focus here is not to prove that it is cheap, but to see where it sits among expensive peers.

Source note: CW's P/E and P/B are mainly estimated from current market capitalization, share price, and company-disclosed financial data. CW's EV/EBITDA refers to statistics pages. Valuation and efficiency metrics for HEICO, Woodward, Crane, and TransDigm come from public statistics/key-statistics pages. Methodologies can differ slightly across platforms, so I use "about" throughout.

Opinion: Curtiss-Wright is not "the most absurdly expensive peer," but it is definitely not "the clearly cheap one." More importantly, even compared with a group of high-quality industrial/defense compounders, the whole group is not cheap. This only shows that the market is willing to pay high prices for quality assets; it does not show that buying CW today offers enough margin of safety. For value investors who care about odds, this comparison mainly warns of crowded industry and style exposure, rather than providing a reason to buy.

Asset or Liquidation Value Method

Fact: At year-end 2025, the company had total assets of $5.221 billion, total liabilities of $2.688 billion, and book shareholders' equity of about $2.534 billion. Based on 36.91 million shares outstanding as of February 20, 2026, book value was about $69/share.

Inference: This company is clearly not an asset-revaluation or liquidation-value target. Its real value mainly comes from certifications, customer relationships, embedded platform positions, engineering know-how, aftermarket, and maintenance positions, rather than land, cash, financial assets, or easily liquidated inventory. The asset method here mainly tells us that the current share price is not based on a discount to hard assets. It is based on sustained high-quality operations + high-multiple capitalization. Therefore, if growth expectations are revised down, the stock lacks an "asset floor" for protection.

My price framework:

• Ideal buy price range: $220-300

• Acceptable hold price range: $300-450

• Clearly overvalued range: Above $600

• Current price (about $769): I view it as clearly overvalued.

Margin of Safety and Risks

Margin-of-safety judgment: insufficient. This is not a case of "valuation is debatable"; under conservative, base, and optimistic models, the current price is hard to justify. Buying Curtiss-Wright today is less a bet that "the market has undervalued it" and more a bet that "the market will continue assigning it an extremely high valuation for a long time." For investors whose core concern is permanent capital loss, that is not a premise I am willing to accept.

There are three most fragile assumptions embedded in the valuation. First, growth durability: if Owner Earnings or EPS can grow only at a mid-single-digit rate over the next decade, rather than near high-single-digit or even low-double-digit rates, the current valuation will be hard to digest. Second, margin durability: Defense Electronics' current 27%+ operating margin is excellent, but if product mix, project timing, or pricing discipline changes, the market will reprice the business. Third, no multiple reversion: the current implied earnings yield is very low, while buybacks and dividends provide little downside cushion. If market risk appetite falls, multiple compression alone could make returns mediocre even if fundamentals continue growing.

Comparison with risk-free and high-grade bonds: As of early June 2026, the U.S. 10-year Treasury yield was about 4.47%, and Moody's Aaa corporate bond yield was about 5.49%. By contrast, using management's raised 2026 EPS guidance midpoint of $15.10 and the current share price of $769.41, Curtiss-Wright's forward earnings yield is only about 2.0%. Using my conservative estimate of TTM Owner Earnings of about $590 million and market capitalization of $28.51 billion, the owner-earnings yield is also only about 2.1%. In other words, the price investors are paying today has already pulled forward most of the company's quality characteristics. To outperform Treasuries and high-grade bonds, investors must rely on years of sustained high growth coexisting with high valuations.

Most important risk list:

• Competitive risk: Open architectures, introduction of alternative suppliers, customer self-development, or prime contractors reallocating share could all reduce the company's content in niches.

• Technology-substitution risk: Especially in defense electronics and communications/computing platforms, technology refreshes quickly, and content on legacy platforms is not perpetual.

• Regulatory and government-contract risk: Government contracts can be terminated partially or fully, and fixed-price contracts usually leave the company bearing most overruns.

• Project timing and cycle risk: Columbia/Virginia-class submarines, commercial nuclear upgrades, and advanced-reactor projects can all be delayed; backlog can also be canceled or compressed.

• Supply-chain risk: The company explicitly discloses that delays or disruptions at key single-source suppliers could affect deliveries and profitability.

• Capital-allocation risk: If the company continues large buybacks in high-valuation ranges, EPS may be boosted in the short term, but intrinsic value per share may not be created.

• Overvaluation risk: This is the most realistic risk today. Even if operations do not stumble, shareholders may earn poor long-term returns because the multiple falls.

• Cybersecurity and compliance risk: Although the company disclosed no material cyber incidents in 2025, defense, nuclear, and industrial-control systems naturally face sustained high-intensity cybersecurity and compliance pressure.

Strongest bear case: If I stood on the short side, the strongest single sentence would be: "This is an excellent company, but the market has already discounted most of the next decade's good news at an extremely high multiple." The bear case may see:

• The naval nuclear propulsion, commercial nuclear, and defense-budget stories are real, but those tailwinds do not mean shareholders still get good odds today;

• The company's forward earnings yield is below long-term Treasuries and Aaa bonds, which is highly unusual for an industrial/defense company;

• If the market reclassifies it from a "quality compounder" to a "high-quality industrial," the valuation could compress from 50x+ back to 30x-35x, enough to consume years of operating growth.

What facts would make me admit I was wrong:

• If over the next 3-5 years the company can grow Owner Earnings / EPS at a low-double-digit rate without materially increasing leverage, while keeping ROIC around 15% or higher, then part of today's high valuation could be delivered through operations.

• If advanced nuclear power, defense-electronics upgrades, and submarine programs convert far faster than expected, and after achieving its 2024 Investor Day targets for 2024-2026 the company can keep raising longer-term targets, that would also show I underestimated its growth.

What facts would make me more convinced not to buy / to reassess:

• Book-to-bill below 1 for multiple consecutive quarters, with backlog clearly declining;

• Defense Electronics or Naval & Power margins weakening meaningfully rather than only fluctuating temporarily;

• FCF conversion below 90% for two or three consecutive years;

• Net debt/EBITDA rising above 2.5x because of expensive acquisitions;

• Management continuing large repurchases at high valuations without sufficiently high-return reinvestment projects.

Checklist and Final Judgment

Investment Checklist

Open questions and limitations: First, the company does not separately disclose "maintenance capital expenditures," so I can only use a conservative substitute in Owner Earnings. Second, Curtiss-Wright is a composite business spanning multiple end-market niches, making peer comparison inherently imperfect. Third, the long-term commercialization of advanced nuclear power carries timing and project uncertainty. These limitations do not overturn the larger conclusion that current valuation is expensive, but they do affect the exact valuation point estimate.

Final Investment Conclusion

【Final Rating】 Watch

【One-Sentence Investment Thesis】 Curtiss-Wright is a high-quality, understandable high-end industrial/defense company with good cash flow, but at the current price the market has already capitalized too much of that excellence in advance.

【Core Bull Case】

• The company operates in niches with high failure costs, strong certification barriers, and deep platform embedding, creating high customer stickiness and difficult replacement.

• From 2021 to 2025, revenue, margins, net income, and free cash flow improved together, showing real and solid operating quality.

• Orders and backlog continued to grow in 2025. Q1 2026 orders were $1.2 billion, book-to-bill was 1.3x, and full-year guidance was raised, so short- to medium-term momentum remains intact.

• The balance sheet is solid, with low net debt/EBITDA and ample interest coverage, giving the company room for continued reinvestment and small acquisitions.

• Naval nuclear propulsion, commercial nuclear upgrades and advanced reactors, and defense-electronics upgrades are real long-term drivers, not just a story.

【Core Bear Case】

• Current valuation is too high: by my estimate, about 48x TTM Owner Earnings and about 56x TTM P/E, with insufficient margin of safety.

• The current forward earnings yield is about 2%, below 10-year Treasuries and Aaa corporate bond yields, making the odds unattractive.

• Defense and nuclear projects are long-cycle, but they remain exposed to budgets, project timing, and fixed-price contract risks.

• Insider ownership is low, and management looks more like excellent professional managers than heavily invested owner-operators.

• Buybacks have generally been rational, but by value-investing standards they do not prove that the company always repurchases when materially undervalued.

【Key Assumptions】

• Demand in naval nuclear propulsion, defense electronics, and commercial nuclear power can at least maintain mid- to high-single-digit growth;

• Overall operating margin can stay in the high-teens to low-twenties range rather than declining materially;

• ROIC can stay roughly around 15% over the next 5-10 years;

• No large, low-return acquisition materially raises leverage;

• Even if valuation reverts, it does not quickly compress into the ordinary industrial range.

【Fair Buy Price】 $220-300/share. Basis: this is a discounted buy range based on my conservative to slightly base-case intrinsic value range, offering a more reasonable margin of safety. If buying only when the stock is clearly below intrinsic value, I would lean toward the lower half of the range.

【Target Holding Period】 If bought at a reasonable price, I think this is a business suitable for 5-10 years or even longer. But buying at the current price means long-term holding does not replace margin of safety.

【Expected Annualized Return】 The following is my opinion-based estimate using "buy at the current price, hold for 10 years, EPS/Owner Earnings growth + valuation reversion"; it is not fact:

• Conservative scenario: -2% to 0%/year

• Base scenario: 2% to 5%/year

• Optimistic scenario: 6% to 8%/year My judgment: at the current price, only the optimistic scenario clearly beats current Treasuries/high-grade bonds, and the margin of outperformance is not dramatic.

【Maximum Loss Risk】 In a bad case, even if the company continues operating well, the market could re-rate it from a "high-quality compounder" to a "high-quality industrial," compressing valuation from around 50x+ to 25x-30x. The stock could plausibly suffer a 40%-60% long-term drawdown. If order timing slows, margins fall, or an expensive acquisition goes wrong, the decline could be deeper. For this company, the largest permanent-capital-loss scenario may not come from business failure; it may come from buying a good company at too high a price.

【Tracking Metrics】 Going forward, I would keep watching these 8 items:

• Total book-to-bill and backlog;

• Defense Electronics segment operating margin;

• Naval & Power segment orders and backlog;

• Whether FCF conversion remains >100%;

• Whether net debt/EBITDA stays <1.5x;

• Whether receivables, inventory, and contract assets grow faster than revenue;

• Acquisition returns and buyback price discipline;

• Delivery against the 2024 Investor Day targets for 2024-2026, and new targets after delivery.

【Signals Triggering Reassessment】

• Book-to-bill <1 for more than two consecutive quarters;

• Clear backlog decline;

• Defense Electronics margin falling to the low 20% range with no sign of recovery;

• FCF conversion staying below 90% for a long period;

• Net debt/EBITDA moving above 2.5x;

• Large acquisitions materially diluting ROIC;

• Management continuing aggressive buybacks at high multiples;

• Material cancellations/delays in government budgets, nuclear projects, or key platforms.

【Final Recommendation】 Calmly put, my assessment of the business itself is much higher than my assessment of the stock at today's price. Curtiss-Wright is a high-quality name worth tracking for the long term. But if your framework is "Buffett-style value investing," especially a balanced but conservative version, the discipline to preserve is not admiration for a good company; it is restraint around purchase odds. My recommendation is simple: put it on a high-quality watchlist, and do not mistake "excellent business" for "worth buying right now." Waiting for a better price often protects long-term capital better than forcing participation.

This report is based on public information and does not constitute investment advice. Markets carry risk; invest with caution.