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Carlisle (CSL) Up 10.3% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Carlisle (CSL - Free Report) . Shares have added about 10.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Carlisle due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Carlisle Matches Q3 Earnings Estimates

Carlisle Companies' third-quarter 2018 earnings and revenues improved on a year-over-year basis. However, the company stated that retirement costs at Carlisle Construction Materials, unfavorable September weather and price sensitivity at Accella weighed over the quarterly top- and bottom-line results.

Earnings/Revenues

Quarterly earnings came in at $1.68 per share, up 22.6% year over year. Notably, the bottom line came in line with the Zacks Consensus Estimate. The company stated that higher sales volumes, price-realization moves, execution of the Carlisle Operating System (COS), lower corporate tax rates and reduced share count aided in boosting its quarterly bottom-line performance. However, retirement costs, higher freight charges and elevated labor-related expenses remain major drags.

Revenues in the third quarter came in at $1,181.4 million, up 17.9% year over year. The headline numbers improved 5.5% year over year on an organic basis. The company stated that adoption of ASC 606 and newly-made acquisitions chiefly drove the quarterly revenues. However, the top line missed the Zacks Consensus Estimate of $1,198 million.

Segmental Break-Up

Revenues from the Carlisle Construction Materials segment totaled $776.8 million, which increased 21.3% year over year. The Carlisle Interconnect Technologies segment generated revenues of $240.2 million, up 13.9% year over year. Top-line numbers of the company’s Carlisle Fluid Technologies segment came in at $72.4 million in the third quarter, up 2.1% year over year. Revenues in the Carlisle Brake & Friction segment were up 14.3% year over year to $92 million.

Costs/Margins

In the Sep-end quarter, Carlisle's cost of goods sold escalated 20.8% year over year to $867.1 million.

Selling and administrative expenses, as a percentage of revenues, were 13.9% compared with 13.8% in the year-ago quarter. Operating margin of the company shrunk 150 basis points year over year to 11.9%.

Balance Sheet

As of Sep 30, 2018, Carlisle's cash and cash equivalents were $780.5 million compared with $378.3 million recorded as of Dec 31, 2017. Long-term debt remained almost flat at $1,587.4 million compared with its value at the end of 2017.

Outlook

Carlisle believes its latest business moves are primarily aimed at supporting the company’s Vision 2025. This Zacks Rank #3 (Hold) company expects that stellar end-market demand and pricing actions will continue to drive its revenues in the quarters ahead as well. Execution of COS, improved top-line performance and acquisition benefits will likely boost its near-term profitability.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -11.54% due to these changes.

VGM Scores

At this time, Carlisle has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Carlisle has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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