While this company may get back on track in the longer-term,
there are too many near-term challenges. In view of the cloudy
outlook, investors should avoid this Zacks Rank # 5 (Strong Sell)
stock as of now.
About the Company
Carpenter Technology Corporation is a manufacturer and
distributor of specialty alloys, including stainless steel and
titanium, and various engineered products made from metallic and
These products are used in planes, cars and trucks, electronic
equipment, medical devices, industrial fittings, sporting goods,
and oil and gas exploration and processing.
Disappointing Third Quarter Results
On April 25, CRS reported its third quarter fiscal 2013 results.
Net adjusted income for the quarter was $0.69 per share, down from
$0.84 per share in the prior-year quarter. The results were below
consensus estimate of $0.74 per share.
The company also missed on the revenue front. The management
revised down their full fiscal year 2013 earnings outlook to low
double-digit growth from 20-30% growth forecasted earlier.
The quarterly results were hurt by increased customer deferrals.
The company stated that its January deferrals and cancellations
increased by 40% over their recent historical run-rate. Weak sales
to distribution customers also impacted the results.
Downward Estimates Revisions
After disappointing results, four analysts have revised their
estimates downwards. The Zacks Consensus Estimate for the current
quarter has gone down from $0.91 per share, 30 days ago to $0.71
per share at present. For full year 2013 too, the estimate has gone
down from $3.07 per share to $2.74 per share.
The company has delivered an average negative earnings surprise
of 1.67% for the last four quarters.
The Bottom Line
CRS is currently Zacks Rank # 5 (Strong Sell) stock and it also
has a longer-term recommendation of "Underperform".
Further, Zacks industry rank of 252 out of 265 also indicates
more weakness to come in the near term.
Better Plays in the Industry?
As of now, none of the companies in specialty steel industry
have been ranked "Buy" or "Strong Buy" by us. Two companies RTI
International (RTI) and Sutor Tech Group (SUTR) are ranked #3
(Hold), of which SUTR has a longer-term recommendation of
"Outperform". However, in view of the negative industry outlook,
investors may like to avoid this space altogether for the time
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