Babcock & Wilcox Enterprises (BW) is back in focus after securing a full notice to proceed on a US$2.4b, 1.2 GW power project for Base Electron, which will support Applied Digital’s AI data center campuses.

The full notice to proceed on the US$2.4b project landed just as Babcock & Wilcox reported a swing to US$9.2 million in fourth quarter net income and a narrower full year loss of US$36.2 million. The share price has reacted sharply, with a 1 day share price return of 45.68% and a very large 1 year total shareholder return, alongside an 85.83% year to date share price return that signals strong momentum in both the short and longer term.

If this AI power project has you thinking about where else the trend could lead, it may be worth checking our screener of 35 AI infrastructure stocks as a starting point for ideas.

After a share price move like this, the key question is simple. Are you looking at a stock that still trades below what its fundamentals and new US$2.4b contract might justify, or is the market already baking in years of future growth?

Most Popular Narrative: 41.6% Overvalued

At a last close of $11.80 versus a narrative fair value of about $8.33, the story implies the price sits well ahead of that fair value anchor.

Debt paydown of the 2026 bonds, recent equity raises and pro forma net debt of about US$113.2m, or 0.8x to 1.6x targeted 2026 EBITDA, point to lower interest expense and a stronger balance sheet. This can support earnings quality and financial flexibility as the US$10b to US$12b global project pipeline converts.

Curious how modest revenue assumptions, a swing from losses to profits and a premium future earnings multiple all fit together? The narrative stitches those pieces into one valuation story, but the key building blocks sit in the full set of projections, not in the headline number. Want to see how those expectations line up with your own view?

Result: Fair Value of $8.33 (OVERVALUED)

However, this story could change quickly if AI data center power demand underwhelms or if large projects are delayed, cancelled, or proceed under weaker commercial terms.

Another Angle: Sales Multiple Tells a Different Story

Our cash flow model flags BW as overvalued, with the share price of $11.80 sitting above an estimated future cash flow value of $4.32. Yet on a P/S of 1.8x, BW appears cheaper than both peers at 4.7x and the US Electrical industry at 2.4x. This raises a simple question: is the market mispricing risk or underestimating potential?

Next Steps

All this points to a mix of excitement and caution, so it makes sense to move quickly, check the underlying data yourself and decide where you stand. To see how that balance looks in detail, take a look at the 2 key rewards and 4 important warning signs and weigh those factors against your own expectations.

Looking for more investment ideas?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.