Carpenter Technology Corporation CRS has been benefiting from strong demand across its end markets.
The company’s cost-cutting initiatives and efforts to preserve liquidity will drive growth. Recent acquisitions and investments in additive manufacturing will also boost the results.
Shares of this Zacks Rank #1 (Strong Buy) company have gained 105.4% in the past year compared with the industry’s growth of 86%.
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Strong Demand to Aid Growth
Carpenter Technology has been witnessing broad-based demand recovery in the aerospace and defense, and medical end-use market, which will likely continue in the remaining part of fiscal 2023.
Aerospace is gaining from the pickup in global travel. Demand continues to accelerate across all the aerospace submarkets as the supply chain ramps up to meet steadily increasing travel demand.
In defense, the company is gaining from increased investments with customers in the development of next-gen programs and platforms.
Solid Recovery Growth to Enhance Performance
In the third quarter of fiscal 2023, Carpenter Technology’s backlog grew 10% on a sequential basis and 70% year over year, backed by strong booking growth. This is the ninth quarter in a row that the backlog has increased.
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.
The company expects continued growth across its end-use markets, especially in Aerospace, Defense and Medical applications, which is expected to boost fiscal 2023 results.
Strategic Actions Bode Well
To further drive shareholder returns, the company seeks to incorporate strategic initiatives to maximize market demand, accelerate growth, optimize operations and generate cash.
CRS is focused on investing in emerging technologies like additive manufacturing and soft magnetics, while providing direct returns to shareholders through quarterly dividends.
Solid Balance Sheet to Support Investments
Carpenter Technology’s total liquidity (including cash and available credit facility borrowings) was $212 million at the end of the second quarter of fiscal 2023.
This consisted of $22 million of cash in hand and $190 million of available borrowings under the credit facility. Its long-term debt was at around $693 million at the end of the third quarter of fiscal 2023.
The company has identified additional actions to preserve and manage cash, and plans to deploy those actions as and when necessary. It continues to realize price and share gains through contract renewals and price increases in its transactional business.
Carpenter Technology has been implementing the Carpenter operating model to address any short-term challenges and increase productivity across facilities.
Other Key Picks
Some other top-ranked stocks from the basic materials space are L.B. Foster Company FSTR, Orla Mining Ltd. ORLA and Osisko Gold Royalties Ltd OR. FSTR and ORLA flaunt a Zacks Rank #1 at present, and OR has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
L.B. Foster has an average trailing four-quarter earnings surprise of 140.5%. The Zacks Consensus Estimate for FSTR’s fiscal 2023 earnings is pegged at 53 cents per share. The consensus estimate for 2023 earnings has been unchanged in the past 60 days. Its shares gained 11% in the last year.
Orla Mining has an average trailing four-quarter earnings surprise of 85.4%. The Zacks Consensus Estimate for ORLA’s 2023 earnings is pegged at 15 cents per share. The consensus estimate for 2023 earnings has moved 87.5% north over the past 60 days. ORLA’s shares gained 48% in the last year.
The Zacks Consensus Estimate for Osisko Gold Royalties’ fiscal 2023 earnings per share is pegged at 47 cents. Earnings estimates for fiscal 2023 have moved 6.8% north in the past 60 days. OR’s shares have gained 50.9% in the past year.
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