Carpenter Posts A Mixed Quarter, But Business Is Ramping

Driven in large part by aerospace demand and improved volume at its Athens facility, the shares of Carpenter Technology (CRS) are up about 20% since my last update on the company. That makes Carpenter a relative standout versus peers like Allegheny Technologies (ATI), Haynes (HAYN), Kaiser (KALU), and Universal Stainless (USAP), but that was a while in coming as shareholders had their patience tested by a slower than expected ramp.

I do see some risks to Carpenter, primarily from its energy and industrial markets, but on balance I like the prospects for an ongoing run of record margins in the Specialty Alloy Operations (or SAO) segment. With fair value in the low to mid $50's, I still see an argument for owning the shares, though it likely won't be a smooth upward move given concerns in the market about aerospace production schedules, the health of the oil/gas market, and so on.

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Carpenter Posts A Mixed Quarter, But Business Is Ramping