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In March 2019, Carpenter Technology Corporation (NYSE:CRS) released its earnings update. Generally, analyst consensus outlook appear cautiously optimistic, with earnings expected to grow by 20% in the upcoming year against the past 5-year average growth rate of 15%. With trailing-twelve-month net income at current levels of US$187m, we should see this rise to US$224m in 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Exciting times ahead?
Longer term expectations from the 7 analysts covering CRS’s stock is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of CRS's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
From the current net income level of US$187m and the final forecast of US$333m by 2022, the annual rate of growth for CRS’s earnings is 20%. This leads to an EPS of $5.85 in the final year of projections relative to the current EPS of $3.96. In 2022, CRS's profit margin will have expanded from 8.7% to 12%.
Future outlook is only one aspect when you're building an investment case for a stock. For Carpenter Technology, there are three key factors you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Carpenter Technology worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Carpenter Technology is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Carpenter Technology? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.