Curtiss-Wright's Accelerating Growth Momentum and Margin Expansion in 2025

Curtiss-Wright Corporation (NYSE: CWW) has emerged as a standout performer in 2025, driven by a confluence of strategic acquisitions, disciplined capital allocation, and operational excellence. The company's second-quarter results underscore its accelerating momentum, with revenue growth, margin expansion, and free cash flow generation outpacing expectations. For investors seeking exposure to high-conviction industrial and defense markets, Curtiss-Wright's execution model offers a compelling case study in how to compound value through a combination of sector alignment and operational rigor.

Strategic Positioning: Defense and Industrial Tailwinds

Curtiss-Wright's core strength lies in its ability to capitalize on secular trends in aerospace, defense, and commercial power. The company's Aerospace & Defense (A&D) segment, which accounts for two-thirds of total sales, has benefited from surging demand for embedded computing systems and naval defense programs. The Columbia-class submarine program, a cornerstone of U.S. defense modernization, has been a key driver, with Curtiss-Wright's Naval & Power segment reporting a 19% year-over-year sales increase in Q2 2025. This segment also saw 36% growth in adjusted operating income, reflecting the company's ability to leverage high-margin, long-lead-time contracts.

The commercial nuclear sector has further diversified Curtiss-Wright's growth engine. The 2024 acquisition of Ultra Energy, a leader in reactor protection systems and neutron monitoring, has expanded the company's footprint in both legacy plant modernization and next-generation small modular reactor (SMR) projects. Ultra Energy's $65 million in annual sales and 100%+ free cash flow conversion rate have already accreted to Curtiss-Wright's financials, with the Naval & Power segment's operating margin jumping 210 basis points to 16.5% in Q2 2025.

Disciplined Capital Allocation: Fueling Shareholder Value

Curtiss-Wright's capital allocation strategy has been a masterclass in balance. The company has returned capital to shareholders through $14 million in share repurchases in Q1 2025 while simultaneously investing in growth. Its $200 million acquisition of Ultra Energy was funded entirely in cash, reflecting a disciplined approach to leveraging its strong balance sheet. The acquisition is expected to be accretive to adjusted EPS in its first full year, excluding purchase accounting costs, and has already contributed to $520–535 million in free cash flow guidance for 2025—a 17% increase from prior projections.

The company's capital expenditures have also been strategically directed. Higher investments in R&D and production capabilities for next-generation submarine and aircraft programs are positioning Curtiss-Wright to capture long-term contracts. Meanwhile, its FCF conversion rate of over 105% in 2025 demonstrates the sustainability of its cash flow generation, even as it funds growth initiatives.

Margin Expansion: Operational Excellence and Restructuring

Curtiss-Wright's margin expansion in 2025 is a testament to its operational discipline. The company's “Pivot to Growth” strategy has prioritized cost optimization and efficiency gains, with restructuring programs contributing to 130 basis points of adjusted operating margin expansion in Q2 2025. Key drivers include:
- Favorable overhead absorption from higher revenues, particularly in the Defense Electronics segment (adjusted margin of 26.8%).
- Product mix optimization, with high-margin naval and nuclear solutions outpacing lower-margin industrial offerings.
- Operational excellence initiatives, such as lean manufacturing and supply chain rationalization, which reduced costs by $582,000 in the Aerospace & Industrial segment alone.

The restructuring efforts, while incurring short-term costs (e.g., $342,000 in the Naval & Power segment in Q2 2024), have been excluded from adjusted metrics to highlight core performance. This transparency has reinforced investor confidence, with adjusted diluted EPS up 21% year-over-year to $3.23 in Q2 2025.

Investment Implications: A High-Conviction Play

Curtiss-Wright's 2025 performance validates its strategic positioning in markets with structural tailwinds. The defense sector, driven by geopolitical tensions and U.S. defense spending, offers a $1.2 trillion addressable market for embedded computing and naval systems. Meanwhile, the global commercial nuclear industry, supported by decarbonization goals and SMR development, presents a $50 billion opportunity for Curtiss-Wright's measurement and control solutions.

For investors, the company's updated 2025 guidance—sales growth of 9–10%, operating income growth of 15–18%, and FCF of $520–535 million—provides a clear roadmap for value creation. The stock's price-to-FCF ratio of 12x (as of August 2025) appears undemanding relative to its growth trajectory and margin expansion potential.

Conclusion: A Model of Strategic Execution

Curtiss-Wright's 2025 results exemplify the power of aligning with high-conviction markets, executing disciplined capital allocation, and driving operational efficiency. As the company continues to benefit from defense modernization and nuclear energy growth, its margin expansion and FCF generation position it as a compelling long-term investment. For those seeking exposure to industrial and defense equities, Curtiss-Wright's strategic execution and robust financials make it a standout candidate in a sector ripe for outperformance.