Curtiss-Wright Soars on Defense Dollars, FAA Mandates, and Smart Cost-Cutting

If you're looking for a stock that's not just surviving but thriving in today's geopolitical and regulatory climate, look no further than Curtiss-Wright (CW). This engineering powerhouse is positioned to capitalize on surging defense spending, FAA safety mandates, and operational efficiencies that are fueling margin expansion. Let's break down why this could be a multi-year winner.

Defense Spending: A Tailwind That's Just Kicking Into Gear

The U.S. military budget is on fire, with fiscal 2026 defense spending projected to hit $1 trillion—a 13% annual boost over Biden-era plans. For Curtiss-Wright, this isn't just theoretical. The company's Q1 2025 revenue jumped 13% year-over-year to $805.6 million, driven by its Defense Electronics and Naval & Power segments. Key contracts include a $27 million deal for ASIST systems for U.S. Navy frigates and a $50 million flight test instrumentation (FTI) contract supporting F-35s and F-18s.

But it's not just the U.S. Curtiss-Wright is supplying NATO allies like Poland and Bulgaria with nuclear infrastructure, and its international backlog is booming. The $3.7 billion order backlog (up 20% YoY) is a war chest of future revenue.

FAA Mandates: A Civilian Growth Engine Ignites

While defense is the headline, don't overlook the FAA's role. The 2024 Reauthorization Act requires all commercial aircraft to have 25-hour cockpit voice recorders (CVRs), a mandate Curtiss-Wright is meeting head-on with its HCR-25 system (collaborated with Honeywell). This recorder's 3,500-hour storage capacity and real-time data streaming not only comply with FAA rules but exceed international standards like ICAO's GADSS initiative.

The kicker? Every commercial aircraft must retrofit these systems within six years, creating a multi-billion-dollar retrofit market. Curtiss-Wright's Q1 results already show aerospace demand surging, with its backlog hitting record levels. Airbus certification for the HCR-25 by mid-2025 will unlock even more growth—think Boeing AND Airbus fleets.

Margin Expansion: The “How” Behind the “What”

Cramer's rule: Margins matter more than top-line growth alone. Here, Curtiss-Wright is nailing it.

• Operating margins hit 18% at the midpoint of 2025 guidance, up from 16% in 2024.
• Cost discipline is key: tariff mitigation strategies and operational tweaks are offsetting headwinds like under absorption in defense electronics.
• High-margin contracts like the HCR-25 and naval programs are pulling the needle.

The $80 million U.S. Air Force HSDAS contract (running through 2030) is a cash cow, and its book-to-bill ratio of 1.2+ shows demand outpacing supply.

Risks? Sure. But the Upside Swamps Them

Geopolitical risks? Yes—trade wars or defense budget cuts could sting. But with a $1 trillion defense budget baseline and FAA mandates creating a decade-long tailwind, the downside is limited. Even challenges like naval segment mix issues are offset by stronger defense electronics growth.

Buy Now, or Wait?

At current levels, CW is trading near its 52-week high, but with a record backlog and 7-8% sales growth guidance, this is a stock to buy on dips. Analysts' average $378 target (vs. current ~$350) suggests 8% upside—and that's conservative.

Cramer's Call: “This is a buy-the-dip stock. If it pulls back to $320, pounce. With defense budgets and FAA mandates as tailwinds, Curtiss-Wright isn't just surviving—it's dominating its niche. Lock in here.”

Final Take

Curtiss-Wright isn't just a defense contractor—it's a regulatory and geopolitical beneficiary with a moat around its safety-critical tech. With margins expanding and demand from both military and civilian sectors, this is a stock built to last. Buckle up—this plane is going straight up.