I've been keeping an eye on Carpenter Technology Corporation (NYSE:CRS) because I'm attracted to its fundamentals. Looking at the company as a whole, as a potential stock investment, I believe CRS has a lot to offer. Basically, it is a financially-sound company with an optimistic growth outlook, not yet reflected in the share price. In the following section, I expand a bit more on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on Carpenter Technology here.
Excellent balance sheet established dividend payer
Investors in search for stocks with room to flourish should look no further than CRS, with its expected earinngs growth of 21%, made up of high-quality, operational cash from its core business, which is expected to increase by 56% next year. This indicates a high-quality bottom-line expansion, as opposed to those driven by unsustainable cost-cutting activities. CRS's shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of CRS's earnings, investors now have the opportunity to buy into the stock to reap capital gains. Also, relative to the rest of US companies with similar levels of earnings, CRS's share price is trading below the group's average. This supports the theory that CRS is potentially underpriced.
CRS's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This indicates that CRS has sufficient cash flows and proper cash management in place, which is a key determinant of the company’s health. CRS seems to have put its debt to good use, generating operating cash levels of 0.41x total debt in the most recent year. This is also a good indication as to whether debt is properly covered by the company’s cash flows.
For Carpenter Technology, there are three essential factors you should look at:
- Historical Performance: What has CRS's returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Dividend Income vs Capital Gains: Does CRS return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from CRS as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of CRS? Explore our interactive list of stocks with large 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 email@example.com. 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.