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Carpenter Technology (CRS) Gives Long-term Outlook, Shares Rise

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Shares of Carpenter Technology Corporation (CRS - Free Report) have risen 3% since the company highlighted its strategic priorities and long-term financial targets at its investor day event on May 16.

Strategic Priorities

Carpenter Technology has been demonstrating its recovery growth trajectory through fiscal 2023, with increased productivity across the company’s facilities. It expects to make substantial progress in fiscal 2024. To further drive shareholder returns, the company seeks to incorporate the following strategic initiatives.

Maximize Market Demand: CRS has been committed to high-growth, high-value end-use industries and applications. It will continue to innovate by offering a unique portfolio of alloy solutions, and leveraging metallurgical and application expertise.

Accelerate Growth: The company aims to invest in expanded or enhanced capabilities to enhance customers’ solutions portfolios. Moreover, it will invest in small-scale projects with attractive paybacks to increase capacity in limited flow paths.

Optimize Operations: Carpenter Technology's goal is to achieve a zero-injury workplace and coordinate assets across the system of facilities to maximize productivity. The company will invest in employee engagement in order to boost productivity. CRS plans to use its experience and knowledge to improve processes.

Generate Cash: The company is focusing on increasing profitability through pricing, mix optimization and volume growth. It expects to keep its working capital and inventory levels in check. CRS will employ a balanced capital allocation strategy centered on high-return investments.

Long-term Financial Goals

The company expects operating income to double from the fiscal 2019 levels by fiscal 2027. The upside will primarily be driven by higher prices, improved product mix and increased volumes. The increase in operating income will provide significant cash flow over the next several years, adding value to the company’s stockholders.

CRS expects the Specialty Alloys Operations segment’s adjusted operating income margins to exceed 20% in fiscal 2027. Net sales (excluding surcharges) will likely be $2.2-$2.4 billion in fiscal 2027.  

Performance Engineered Products segment is projected to reach adjusted operating income margins of 13-15%. Net sales (excluding surcharges) for the segment are expected between $570 million and $610 million in fiscal 2027.

CRS projects a cumulative adjusted free cash flow of $400-$600 million between fiscal 2024 and 2027.

Price Performance

Carpenter Technology’s shares have gained 37.8% in the past year compared with the industry’s growth of 27.8%.


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Zacks Rank & Stocks to Consider

Carpenter Technology currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are AngloGold Ashanti (AU - Free Report) , Gold Fields Limited (GFI - Free Report) , and Alamos Gold Inc. (AGI - Free Report) . AU and GFI currently flaunt a Zacks Rank #1 (Strong Buy), and AGI carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for AngloGold Ashanti’s earnings per share is pegged at $1.94 for 2023. Earnings estimates have been revised 22% upward in the past 60 days. The company has gained 45% in a year.

The Zacks Consensus Estimate for Gold Fields’ fiscal 2023 earnings per share is pegged at $1.01. Earnings estimates have moved 6.3% north in the past 60 days. Its shares have gained 46.2% in the past year.

The Zacks Consensus Estimate for Alamos Gold’s earnings per share is pegged at 47 cents for 2023. Earnings estimates have been revised 14.6% upward in the past 60 days. AGI has gained 84.5% in a year.

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