Babcock & Wilcox (NYSE: BW) Surges 13.18% on $40 Million Canadian Refinery Contract

Babcock & Wilcox Enterprises Inc. (NYSE: BW) surged 13.18% in pre-market trading on December 31, 2025, driven by a $40 million contract to supply Wet Gas Scrubbing technology to a Canadian refinery. This marks the company’s expanding footprint in North America’s refining sector and follows additional $10 million in boiler equipment contracts for a pulp and paper mill upgrade.

The stock’s rally coincided with the redemption of $26 million in 8.125% Senior Notes due 2026, signaling improved financial discipline. Analysts highlight the contracts as pivotal for BW’s growth, aligning with global decarbonization trends and positioning the firm to capitalize on clean energy infrastructure demand. However, persistent operational challenges—including a negative EBIT margin and high debt—remain critical risks for long-term sustainability.

Despite the recent positive momentum, BW’s balance sheet remains under pressure. Its debt-to-equity ratio stands at 1.75 as of Q4 2025, and the company continues to report a negative EBIT margin, which raises concerns about profitability. However, the recent project wins are expected to provide a meaningful uplift to revenue and cash flow generation in the coming quarters.

In the broader energy transition narrative, BW’s technology is increasingly relevant for clients looking to reduce emissions while maintaining production efficiency. The company’s ability to convert these large project contracts into sustainable earnings will be critical for its long-term trajectory. Investors are advised to monitor upcoming quarterly earnings reports for signs of operational improvement and debt reduction progress.