Precision Castparts Corp.
) reached a 52-week high of $273.08 on Friday, Jan 10, 2014.
However, the stock closed at $271.22, representing a one-year
return of about 44.4% and a decent year-to-date return of about
0.71%. Average volume of shares traded over the last three months
stands at approximately 531,744.
Increased demand in the commercial aerospace division, strong
oil and gas businesses and strategic acquisitions are some of the
growth catalysts. In addition, Precision Castparts reported
improved results for the second quarter of 2014.
The company delivered positive earnings surprises in two of
the last four quarters with an average beat of 0.18%. This Zacks
Rank #2 (Buy) company has a market cap of $39.04 billion and a
long-term expected earnings growth rate of 13.2%.
Precision Castparts' Strengths
Precision Castparts is all set to benefit from growth in its
Aerospace and IGTbusiness. Currently, the aerospace market looks
promising and is also expected to grow in the near future. Also,
sales expectations in both Airframe products and Forged Products
are promising, thanks to the increasing production levels of
Further, the company is continually focusing on expanding its
product lines and markets. Precision Castparts completed twelve
acquisitions in fiscal 2013, the most recent being that of
Permaswage SAS for $600 million in an all cash transaction. The
combined contribution of these acquisitions was approximately
$400 million to sales in fiscal 2013. These acquisitions will add
to the company's diverse operations, thereby benefiting it in the
future by improving its sales and strengthening its position in
the global market.
Apart from these, the company has reported steadily rising
earnings per share (EPS) with an annual growth rate of 18.7% over
the last decade. This in turn results from steadily rising
earnings that do not vary greatly through a full business cycle.
The company's multiple business lines with different business
cycle patterns helped it with steady earnings over the year, even
when the aviation market was weak. Precision Castparts has had
net profit margins in the range of 6.2% to 17.1% over the last 10
years with an average net profit margin of 12.3%. The company
also had a return on equity in the range of 9.8% to 28.1% during
the last 10 years.
Improved 1Q14 Earnings
Precision Castparts Corp. reported strong second-quarter
fiscal 2014 results with record revenues and earnings per share
from continuing operations. Net income from operations increased
27.7% to $424 million in the reported quarter from $332 million
in the prior-year quarter.
The company reported earnings from continuing operations of
$2.90 per share, which beat the Zacks Consensus Estimate of $2.82
by 2.8%. Quarterly earnings were up 27.7% year over year from
$2.27 in the second quarter of fiscal 2013.
Revenues increased 22.6% year over year to $2,362 million from
$1,927 million in the prior-year quarter, primarily driven by
organic growth of 6%.
Over the last 90 days, the Zacks Consensus Estimate for 2014
grew 0.4% to $12.10 per share and grew 0.6% to $14.04 per share
The improved results in the recently reported quarter came on
the back of increased demands in the commercial aerospace as well
as strong oil and gas businesses. Two of the three reporting
segments posted double digit revenue growth during the quarter.
Furthermore, IGT is also showing good momentum in its aftermarket
backlog and the company expects its major end markets to drive
Other Stocks to Consider
currently has a favorable Zacks Rank, investors interested in
metal products and the aerospace sector can consider
Alliant Techsystems Inc.
Elbit Systems Ltd
Orbital Sciences Corp.
). All three carry a Zacks Rank #1 (Strong Buy).
ALLIANT TECHSYS (ATK): Free Stock Analysis
ELBIT SYSTEMS (ESLT): Free Stock Analysis
ORBITAL SCIENCE (ORB): Free Stock Analysis
PRECISION CASTP (PCP): Free Stock Analysis
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