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Reasons to Retain Carpenter Technology (CRS) Stock For Now
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Carpenter Technology Corporation (CRS - Free Report) is benefiting from solid demand across its key end-markets, focus on cost-reduction initiatives as well as investment in additive manufacturing and soft magnetics.
Carpenter Technology currently carries a Zacks Rank #3 (Hold) and has a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3, offer the best investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
Growth Drivers
Carpenter Technology is gaining from improved end-market demand, supported by strong backlog growth in first-quarter fiscal 2022. Management anticipates this momentum will continue through 2022. The company is witnessing demand recovery in the aerospace and defense and medical end-use market with strong demand expected in calendar 2022. Industrial end-use market is expected to witness continued strong demand for semiconductor applications for its ultra-high-purity materials, recovery in industrial distribution as well as higher consumer electronics demand.
Apart from this, Carpenter Technology’s results will benefit from the improving demand in the medical end-use market as the market approaches pre-pandemic levels. This market will gain from a recovery in elective surgery volume as a majority of the population gets vaccinated. Also, large OEM, leading advanced materials portfolio and the ability to develop new material solutions will fuel growth in the defense submarket. In the transportation end-use market, demand in the light light-duty submarket remains strong on higher customer spending. The light vehicle and heavy-duty truck submarkets will continue to grow with an increased market share.
Carpenter Technology’s financial position is strong, which gives it the flexibility to strengthen its long-term growth profile by investing in emerging technologies like additive manufacturing and soft magnetics. In fact, the commissioning of a hot strip mill project in Reading campus will support the growing demand for soft magnetics material and expanding electrification initiatives across multiple markets. The company built its additive portfolio with the acquisitions of CalRam and Puris, and completed the construction of an emerging technology center in Athens, AL, to capitalize on rapid additive manufacturing growth.
Carpenter Technology has been implementing cost-reduction initiatives and portfolio realignments that are anticipated to support cost savings. The company is on track to spend about $125 million in capital expenditures for fiscal 2022 and prioritizing capital investments to target the existing and future growth markets. It also undertook initiatives to reduce the inventory level to align with customer demand.
Meanwhile, Carpenter Technology’s bottom-line results will continue to be adversely impacted by inventory-reduction initiatives and COVID-19 mitigation costs.
Price Performance
Carpenter Technology’s shares have surged 57.5% in the past year compared with the industry's growth of 63.2%.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Carpenter Technology currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Olin Corporation (OLN - Free Report) , Nucor Corporation (NUE - Free Report) and Bunge Limited (BG - Free Report) . All of these stocks currently flaunt a Zacks Rank #1.
Olin has an expected earnings growth rate of around 740% for the current fiscal year. The Zacks Consensus Estimate for the current-year earnings has been revised 20.5% upward over the last 60 days.
Olin’s shares have surged 229% in the past year. The company has a long-term earnings growth of 56%.
Nucor has a projected earnings growth rate of around 583% for 2021. The Zacks Consensus Estimate for the current-year earnings has been revised upward by 18.1% in the past 60 days.
The company’s shares have soared 128% in a year’s time. Nucor has a trailing four-quarter earnings surprise of 2.74%, on average.
Bunge has an estimated earnings growth rate of around 45% for the current year. In the past 60 days, the Zacks Consensus Estimate for the current-year earnings has been revised upward by 36%
The company’s shares have appreciated 60% in the past year. Bunge has a trailing four-quarter earnings surprise of 105.7%, on average. It has a long-term earnings growth of 12.6%
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Reasons to Retain Carpenter Technology (CRS) Stock For Now
Carpenter Technology Corporation (CRS - Free Report) is benefiting from solid demand across its key end-markets, focus on cost-reduction initiatives as well as investment in additive manufacturing and soft magnetics.
Carpenter Technology currently carries a Zacks Rank #3 (Hold) and has a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3, offer the best investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
Growth Drivers
Carpenter Technology is gaining from improved end-market demand, supported by strong backlog growth in first-quarter fiscal 2022. Management anticipates this momentum will continue through 2022. The company is witnessing demand recovery in the aerospace and defense and medical end-use market with strong demand expected in calendar 2022. Industrial end-use market is expected to witness continued strong demand for semiconductor applications for its ultra-high-purity materials, recovery in industrial distribution as well as higher consumer electronics demand.
Apart from this, Carpenter Technology’s results will benefit from the improving demand in the medical end-use market as the market approaches pre-pandemic levels. This market will gain from a recovery in elective surgery volume as a majority of the population gets vaccinated. Also, large OEM, leading advanced materials portfolio and the ability to develop new material solutions will fuel growth in the defense submarket. In the transportation end-use market, demand in the light light-duty submarket remains strong on higher customer spending. The light vehicle and heavy-duty truck submarkets will continue to grow with an increased market share.
Carpenter Technology’s financial position is strong, which gives it the flexibility to strengthen its long-term growth profile by investing in emerging technologies like additive manufacturing and soft magnetics. In fact, the commissioning of a hot strip mill project in Reading campus will support the growing demand for soft magnetics material and expanding electrification initiatives across multiple markets. The company built its additive portfolio with the acquisitions of CalRam and Puris, and completed the construction of an emerging technology center in Athens, AL, to capitalize on rapid additive manufacturing growth.
Carpenter Technology has been implementing cost-reduction initiatives and portfolio realignments that are anticipated to support cost savings. The company is on track to spend about $125 million in capital expenditures for fiscal 2022 and prioritizing capital investments to target the existing and future growth markets. It also undertook initiatives to reduce the inventory level to align with customer demand.
Meanwhile, Carpenter Technology’s bottom-line results will continue to be adversely impacted by inventory-reduction initiatives and COVID-19 mitigation costs.
Price Performance
Carpenter Technology’s shares have surged 57.5% in the past year compared with the industry's growth of 63.2%.
Zacks Rank & Stocks to Consider
Carpenter Technology currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Olin Corporation (OLN - Free Report) , Nucor Corporation (NUE - Free Report) and Bunge Limited (BG - Free Report) . All of these stocks currently flaunt a Zacks Rank #1.
Olin has an expected earnings growth rate of around 740% for the current fiscal year. The Zacks Consensus Estimate for the current-year earnings has been revised 20.5% upward over the last 60 days.
Olin’s shares have surged 229% in the past year. The company has a long-term earnings growth of 56%.
Nucor has a projected earnings growth rate of around 583% for 2021. The Zacks Consensus Estimate for the current-year earnings has been revised upward by 18.1% in the past 60 days.
The company’s shares have soared 128% in a year’s time. Nucor has a trailing four-quarter earnings surprise of 2.74%, on average.
Bunge has an estimated earnings growth rate of around 45% for the current year. In the past 60 days, the Zacks Consensus Estimate for the current-year earnings has been revised upward by 36%
The company’s shares have appreciated 60% in the past year. Bunge has a trailing four-quarter earnings surprise of 105.7%, on average. It has a long-term earnings growth of 12.6%