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In March 2019, Carpenter Technology Corporation (NYSE:CRS) announced its earnings update. Overall, analysts seem cautiously optimistic, with earnings expected to grow by 20% in the upcoming year relative to the past 5-year average growth rate of 15%. Presently, with latest-twelve-month earnings at US$187m, we should see this growing to US$224m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Carpenter Technology in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Exciting times ahead?
The view from 7 analysts over the next three years is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of CRS's earnings growth over these next few years.
This results in an annual growth rate of 20% based on the most recent earnings level of US$187m to the final forecast of US$333m by 2022. EPS reaches $5.85 in the final year of forecast compared to the current $3.96 EPS today. With a current profit margin of 8.7%, this movement will result in a margin of 12% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Carpenter Technology, I've put together three pertinent factors you should further examine:
- 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.