Carpenter Technology (NYSE:CRS)
may operate in a specialized niche of the metals and alloys sector, but
that hasn't shielded it from serious pressures across its business.
With distributors like Wesco Aircraft (NYSE:WAIR) and KLX (NASDAQ:KLXI)
trying to operate with leaner inventories and the energy equipment
market in freefall, Carpenter has seen ongoing operating erosion for
over a year now, and the shares are down close to 40% over the last
year.
Energy will bottom out at some point, and the
combination of increasing aircraft builds and an eventual completion of
those distribution inventory adjustments will improve sales to the aero
end market. What's more, the company has shown that it can generate good
margins and strong operating leverage when volumes are strong. The
question is how much risk an investor wants to take on by holding the
shares ahead of that recovery, particularly when this is really more of a
trade than a long-term holding.
Read more here:
Carpenter Technology Hammered On Slow Aero And Vanishing Energy
