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Carpenter Technology (CRS) Q1 Earnings Miss Estimates, Up Y/Y

Zacks Equity Research

Carpenter Technology CRS delivered adjusted net income of $41.2 million or 85 cents per share in the first quarter of fiscal 2020 (ended Sep 30, 2019), missing the Zacks Consensus Estimate of 89 cents. The figure, however, comes in higher than the year-ago quarter’s net income of $31.5 million or 65 cents per share.

Net sales of $585.4 million for the quarter were up 2.3% year over year. However, the reported figure missed the Zacks Consensus Estimate of $593 million. Volumes were down 5% on a year-over-year basis.

Cost of goods sold in the reported quarter edged down around 1.6% year over year to $472.8 million. Gross profit rose 22.8% year over year to $112.6 million. Operating profit in the quarter was $59.8 million, advancing 32.8% from the prior-year quarter’s $45.0 million. Operating margin was 10.2% in the quarter compared with the year-earlier quarter’s 7.9%.

The company generated its strongest quarterly operating income performance in six years. Stellar operational performance reflects richer product mix, strong commercial and operating execution, and improved market conditions in key end-use markets.

Carpenter Technology Corporation Price, Consensus and EPS Surprise

Carpenter Technology Corporation Price, Consensus and EPS Surprise

Carpenter Technology Corporation price-consensus-eps-surprise-chart | Carpenter Technology Corporation Quote

Segment Performance

The Specialty Alloys Operations segment reported sales of $491.1 million, reflecting year-over-year growth of 3.3%. The segment sold 60,044 pounds, 4.2% lower than the prior-year quarter. Operating profit surged 53.4% year over year to $81 million. The segment delivered record fiscal first-quarter operating income driven by richer product mix.

The Performance Engineered Products’ net sales declined 2.1% year over year to $109.4 million in the September-end quarter. The segment sold 3,250 pounds, 19% higher from the year-ago quarter. The segment reported operating loss of $2 million in the reported quarter compared with $7 million in the prior year quarter.

Financials

The company had cash and cash equivalents of $25 million in the fiscal first quarter, up from $17 million recorded at the prior-year quarter’s end. Long-term debt was $550.9 million as of Sep 30, 2019, compared with $545.5 million as of Sep 30, 2018. Cash provided by operating activities decreased to $0.7 million for the quarter from the year-earlier quarter’s $9.4 million.

Price Performance

Carpenter Technology’s shares have gained 10.8% over the past year as against the industry's decline of 8.3%.



Zacks Rank & Stocks to Consider

Carpenter Technology currently carries a Zacks Rank #4 (Sell).

A few better-ranked stocks in the basic materials space are Kinross Gold Corp. KGC, Franco-Nevada Corp. FNV and Kirkland Lake Gold Ltd. KL, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinross has an impressive expected earnings growth rate of 190% for 2019. The company’s shares have surged 67% in the past year.

Franco-Nevada has a projected earnings growth rate of 49.3% for the ongoing year. The company’s shares have rallied 42.8% in a year’s time.

Kirkland Lake Gold has an estimated earnings growth rate of 71.3% for the current year. Its shares have soared 113.4% in the past year.

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