Key Takeaways
- Carpenter Technology shares fell 22% today after first-quarter revenue of $798.2 million came in about 4% below consensus, even though EPS of $3.25 beat.
- Operating income set a first-quarter record of $196.4 million, up 28%, and management kept its full-year profit outlook.
- The selloff looks bigger than the miss, but Carpenter guided the second quarter flat, so it needs a much stronger back half.
- TTM Technologies, Lam Research and Nokia also sank today despite beating estimates, and Forgent Power Solutions fell after announcing its CFO is leaving.
Carpenter Technology (CRS) just posted record first-quarter operating income, and its stock sank 22% today anyway.
CEO Tony Thene said Carpenter “delivered another strong quarter” in its results before the bell. Investors looked at the sales line instead.
A small miss, a big reaction
For the quarter ended Sept. 30:
- Revenue of $798.2 million, up 8.8% from a year ago but about 4% below the $830.7 million consensus
- EPS of $3.25, ahead of the $3.03 consensus
- Operating income of $196.4 million, up 28%
Strip out surcharges, which pass raw-material costs on to customers, and sales grew just 5.3%. They also fell $44.9 million from the fourth quarter. Thene said on the call that the quarter was essentially at guidance, and the shortfall might come down to a single shipment that slipped past quarter-end.
Operating income also landed near the low end of the $195 million to $200 million Carpenter guided for in July. For the second quarter, it expects $192 million to $197 million.
Margins are doing the heavy lifting
Pricing and a richer mix keep fattening Carpenter’s margins…
The first quarter came in higher still, at nearly 25%.
Wall Street also expects sales growth to speed up…
That’s about 12% growth this fiscal year, against 8.8% in the first quarter. At Wednesday’s close, investors were paying 27x forward earnings for that growth. Today’s drop takes it closer to 21x.
TIKR tracks 8 analysts on Carpenter Technology. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Carpenter Technology, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Carpenter Technology’s Analyst Ratings
In-line isn’t good enough today
Carpenter had company. TTM Technologies (TTMI) sank [28%] despite a beat and record revenue, up 60%, because its fourth-quarter outlook only matched estimates. Lam Research (LRCX) fell [10%] after a record quarter because its December-quarter guide only came in roughly in line. Nokia (NOK) fell [11%] as its revenue beat came with an unchanged full-year outlook and weaker cash flow expectations. And Forgent Power Solutions (FPS) dropped [24%] after saying its CFO is stepping down.
The selloff looks bigger than the miss
Carpenter kept its fiscal 2027 operating income outlook of $850 million to $880 million, up 21% to 25%. Thene also told analysts on the call, “My outlook on demand is stronger than it was a quarter ago.”
My take: a roughly 4% sales miss doesn’t justify a [22%] drop when the profit outlook didn’t budge.
Of course, with the second quarter guided flat, Carpenter needs a much bigger back half to hit that outlook. Its next report, early next year, is the first check.
So what is Carpenter Technology stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
