An Abrupt Shift In Business Will Challenge Carpenter's Self-Improvement Story

The outbreak of Covid-19 has dramatically shifted the outlooks and operating environments for many businesses, and in the case of Carpenter Technology (CRS), it's going to seriously challenge the company's recent self-improvement efforts, efforts that had seen notable product mix and margin improvements in the Specialty Alloys business. With aerospace making up about 60% of Carpenter's revenue mix and the likelihood of a multiyear recovery path given the hit to the airline sector, Carpenter is going to have its work cut out for it.

I still see opportunities for Carpenter to drive better results through self-improvement, but the next few quarters will give investors good insight into how much the company's efforts over the past few years matter in real-world downturns. Past downturns have pushed operating margins down to the low single digits, and the company will need to do better than that to support an "it's different this time" argument for a stock and a sector where it's long been difficult to earn sustained market-beating returns.

Follow this link for the full article:
An Abrupt Shift In Business Will Challenge Carpenter's Self-Improvement Story