Carpenter Technology Corporation’s (NYSE:CRS) latest earnings announcement in June 2018 confirmed that the company experienced a significant tailwind, more than doubling its earnings from the prior year. Below, I’ve presented key growth figures on how market analysts perceive Carpenter Technology’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Analysts’ outlook for the coming year seems pessimistic, with earnings declining by -5.5%. But in the following year, there is a complete contrast in performance, with earnings growth rates reaching double digit 23.1% compared to today’s level before falling. to US$219.6m in 2021.
Even though it is informative knowing the growth rate each year relative to today’s figure, it may be more insightful estimating the rate at which the business is rising or falling every year, on average. The advantage of this technique is that it ignores near term flucuations and accounts for the overarching direction of Carpenter Technology’s earnings trajectory over time, fluctuate up and down. To calculate this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 8.7%. This means, we can anticipate Carpenter Technology will grow its earnings by 8.7% every year for the next few years.
For Carpenter Technology, I’ve compiled three relevant aspects you should look at:
- 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 CRS 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 CRS is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CRS? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.