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Carpenter (CRS) Up 11% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Carpenter Technology (CRS - Free Report) . Shares have added about 11% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Carpenter due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Carpenter Technology Q3 Earnings Top Estimates, Surge Y/Y
Carpenter Technology reported earnings of $1.19 per share for third-quarter fiscal 2024, surpassing the Zacks Consensus Estimate of 94 cents. The bottom line marked a solid improvement of 213% from the adjusted earnings of 38 cents per share in the year-ago quarter. Despite a decline in revenues due to lower volumes, CRS achieved this earnings improvement courtesy of improved productivity, product mix optimization and pricing actions.
Including special items, earnings were 12 cents per share compared with 38 cents in the third quarter of fiscal 2023., CRS recorded a noncash pension settlement charge of $51.9 million as a result of executing de-risking actions to annuitize certain pension plan obligations. It also recorded a noncash goodwill impairment charge of $14.1 million related to the Latrobe Distribution reporting unit in the Performance Engineered Products segment.
Net sales dipped 0.8% year over year to $685 million as the company witnessed a 12% year-over-year decline in shipment volume. The figure missed the Zacks Consensus Estimate of $691 million.
By end-markets, CRS witnessed a year-over-year revenue increase of 30.5% in Aerospace and Defense and 35.4% in Medical. Meanwhile, revenues in Transportation end-markets were down 22.6%, Distribution dipped 21%, and Industrial and Consumer declined 19.4%. Revenues in the Energy end-markets were down 2.8%.
Operational Results
The cost of goods sold declined 9.8% year over year to $538 million. The gross profit surged 57.2% year over year to $147 million.
The adjusted operating income was a record $90 million, a solid 129% jump from the prior-year quarter’s $39.3 million. This was attributed to improved productivity, product mix optimization and pricing actions.
Segment Performances
The Specialty Alloys Operations segment reported sales of $608.5 million compared with the prior-year quarter’s $603 million. We predicted the segment sales at $606 million. The segment sold 50,846 pounds compared with the year-ago quarter’s 56,516 pounds. The reported figure missed our estimate of 56,579 pounds.
The segment posted an operating profit of $103.5 million compared with the prior-year quarter’s $49 million. Our projection for the same was $88 million.
The Performance Engineered Products’ net sales fell 11% year over year to $102 million. The reported figure missed our estimate of $106 million. The segment sold 2,618 pounds compared with the year-ago quarter’s 3,232 pounds. The figure was lower than our projection of 2,963 pounds.
Segmental operating profit was $9.2 million compared with the prior-year quarter’s $10.2 million. The metric was in line with our estimate.
Financials
Carpenter Technology ended third-quarter fiscal 2024 with cash and cash equivalents of $53.5 million compared with $44.5 million at the end of fiscal 2023. The long-term debt was around $694 million at the end of the quarter compared with $693 as of the end of fiscal 2023.
Cash flow from operating activities was $83.4 million, a substantial improvement from $4 million in the prior-year quarter, reflecting the improvement in earnings and less cash used for working capital compared with the prior-year quarter.
Guidance for Q4 & FY24
Carpenter Technology expects operating income to range between $110 million and $115 million in the fourth quarter of fiscal 2024. For fiscal 2024, CRS projects adjusted operating profit in the range of $339-$344 million. If achieved, the year would mark the company’s most profitable year on record.
The company expects to generate more than $100 million in adjusted free cash flow in the fourth quarter of fiscal 2024.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 12.6% due to these changes.
VGM Scores
At this time, Carpenter has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Carpenter has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Carpenter is part of the Zacks Steel - Speciality industry. Over the past month, Allegheny Technologies (ATI - Free Report) , a stock from the same industry, has gained 5.4%. The company reported its results for the quarter ended March 2024 more than a month ago.
Allegheny Technologies reported revenues of $1.04 billion in the last reported quarter, representing a year-over-year change of +0.5%. EPS of $0.48 for the same period compares with $0.49 a year ago.
Allegheny Technologies is expected to post earnings of $0.57 per share for the current quarter, representing a year-over-year change of -3.4%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.2%.
Allegheny Technologies has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.
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Carpenter (CRS) Up 11% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Carpenter Technology (CRS - Free Report) . Shares have added about 11% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Carpenter due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Carpenter Technology Q3 Earnings Top Estimates, Surge Y/Y
Carpenter Technology reported earnings of $1.19 per share for third-quarter fiscal 2024, surpassing the Zacks Consensus Estimate of 94 cents. The bottom line marked a solid improvement of 213% from the adjusted earnings of 38 cents per share in the year-ago quarter. Despite a decline in revenues due to lower volumes, CRS achieved this earnings improvement courtesy of improved productivity, product mix optimization and pricing actions.
Including special items, earnings were 12 cents per share compared with 38 cents in the third quarter of fiscal 2023., CRS recorded a noncash pension settlement charge of $51.9 million as a result of executing de-risking actions to annuitize certain pension plan obligations. It also recorded a noncash goodwill impairment charge of $14.1 million related to the Latrobe Distribution reporting unit in the Performance Engineered Products segment.
Net sales dipped 0.8% year over year to $685 million as the company witnessed a 12% year-over-year decline in shipment volume. The figure missed the Zacks Consensus Estimate of $691 million.
By end-markets, CRS witnessed a year-over-year revenue increase of 30.5% in Aerospace and Defense and 35.4% in Medical. Meanwhile, revenues in Transportation end-markets were down 22.6%, Distribution dipped 21%, and Industrial and Consumer declined 19.4%. Revenues in the Energy end-markets were down 2.8%.
Operational Results
The cost of goods sold declined 9.8% year over year to $538 million. The gross profit surged 57.2% year over year to $147 million.
The adjusted operating income was a record $90 million, a solid 129% jump from the prior-year quarter’s $39.3 million. This was attributed to improved productivity, product mix optimization and pricing actions.
Segment Performances
The Specialty Alloys Operations segment reported sales of $608.5 million compared with the prior-year quarter’s $603 million. We predicted the segment sales at $606 million. The segment sold 50,846 pounds compared with the year-ago quarter’s 56,516 pounds. The reported figure missed our estimate of 56,579 pounds.
The segment posted an operating profit of $103.5 million compared with the prior-year quarter’s $49 million. Our projection for the same was $88 million.
The Performance Engineered Products’ net sales fell 11% year over year to $102 million. The reported figure missed our estimate of $106 million. The segment sold 2,618 pounds compared with the year-ago quarter’s 3,232 pounds. The figure was lower than our projection of 2,963 pounds.
Segmental operating profit was $9.2 million compared with the prior-year quarter’s $10.2 million. The metric was in line with our estimate.
Financials
Carpenter Technology ended third-quarter fiscal 2024 with cash and cash equivalents of $53.5 million compared with $44.5 million at the end of fiscal 2023. The long-term debt was around $694 million at the end of the quarter compared with $693 as of the end of fiscal 2023.
Cash flow from operating activities was $83.4 million, a substantial improvement from $4 million in the prior-year quarter, reflecting the improvement in earnings and less cash used for working capital compared with the prior-year quarter.
Guidance for Q4 & FY24
Carpenter Technology expects operating income to range between $110 million and $115 million in the fourth quarter of fiscal 2024. For fiscal 2024, CRS projects adjusted operating profit in the range of $339-$344 million. If achieved, the year would mark the company’s most profitable year on record.
The company expects to generate more than $100 million in adjusted free cash flow in the fourth quarter of fiscal 2024.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 12.6% due to these changes.
VGM Scores
At this time, Carpenter has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Carpenter has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Carpenter is part of the Zacks Steel - Speciality industry. Over the past month, Allegheny Technologies (ATI - Free Report) , a stock from the same industry, has gained 5.4%. The company reported its results for the quarter ended March 2024 more than a month ago.
Allegheny Technologies reported revenues of $1.04 billion in the last reported quarter, representing a year-over-year change of +0.5%. EPS of $0.48 for the same period compares with $0.49 a year ago.
Allegheny Technologies is expected to post earnings of $0.57 per share for the current quarter, representing a year-over-year change of -3.4%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.2%.
Allegheny Technologies has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.