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1. Company Snapshot

1.a. Company Description

Carpenter Technology Corporation engages in the manufacture, fabrication, and distribution of specialty metals in the United States, Europe, the Asia Pacific, Mexico, Canada, and internationally.It operates in two segments, Specialty Alloys Operations and Performance Engineered Products.The company offers specialty alloys, including titanium alloys, powder metals, stainless steels, alloy steels, and tool steels, as well as additives, and metal powders and parts.


It serves aerospace, defense, medical, transportation, energy, industrial, and consumer markets.The company was founded in 1889 and is headquartered in Philadelphia, Pennsylvania.

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1.b. Last Insights on CRS

Carpenter Technology Corporation's recent performance was driven by strong Q2 2026 earnings, with operating income reaching a record high and FY26 guidance raised. Robust aerospace and defense demand, coupled with improving operating leverage, are key growth drivers. The company's strategic integration into the aerospace and defense sector justifies its premium valuation. Additionally, a "buy" rating from Zacks Rank and a 52-week high reinforce positive sentiment. Strong bookings and backlog, with projected $660-$700M fiscal 2026 operating income, further bolster growth prospects.

1.c. Company Highlights

2. Carpenter Technology's Earnings Shine with Record Operating Income

Carpenter Technology Corporation reported a stellar second-quarter fiscal year 2026 earnings, with operating income reaching $155 million, a 31% year-over-year increase, and exceeding its previous record. The SAO segment's adjusted operating margin expanded to 33.1%, up from 28.3% a year ago, driven by product mix optimization and pricing actions. Sales, excluding surcharge, were $527.3 million in the SAO segment, a 10% year-over-year increase on 5% higher volume. Adjusted earnings per diluted share was $2.33, beating estimates of $2.2.

Publication Date: Feb -16

📋 Highlights
  • Record Operating Income:: Q2 operating income reached $155M, a 31% YoY increase, with SAO segment margins hitting 33.1%, up from 28.3% YoY.
  • Aerospace & Defense Demand Surge:: Sales up 15% YoY, driven by 23% sequential growth in commercial aerospace bookings and 30% sequential engine order growth.
  • Strong Cash Flow & Share Repurchases:: Generated $85.9M adjusted free cash flow in Q2, with $280M+ expected in FY2026; repurchased $32.1M shares, totaling $183.1M to date.
  • Pricing Tailwinds from Supply-Demand Gap:: Nickel-based superalloy supply remains stagnant since 2019, while demand for aerospace alloys is rising; Carpenter is the only major capacity expander, adding 7% (9,000 tons) to production.
  • Earnings Guidance Raised:: FY2026 guidance increased to $680–$700M, a 30–33% YoY rise, reflecting sustained pricing, volume growth, and EBIT per pound improvements expected in Q3.

Segment Performance

The aerospace and defense end-use market saw sales up 15% year-over-year, with bookings increasing 8% sequentially, driven by commercial aerospace bookings up 23% sequentially. The energy end-use market also showed strength, with sales up 19% year-over-year. The company's total sales, excluding raw material surcharge, were up 8% over the prior year and down 2% sequentially.

Cash Flow and Liquidity

The company generated $132.2 million of cash from operating activities and spent $46.3 million on capital expenditures, resulting in adjusted free cash flow of $85.9 million. Liquidity stood at $730.8 million, including $231.9 million of cash and $498.9 million of available borrowings under its credit facility.

Outlook and Guidance

The company raised its guidance for fiscal year 2026 to $680 million to $700 million, representing a 30% to 33% increase over the record fiscal year 2025 earnings. It expects pricing actions to continue to be a positive tailwind due to the supply-demand imbalance. Analysts estimate next year's revenue growth at 10.5%.

Valuation

With a P/E Ratio of 43.75 and an EV/EBITDA of 26.47, the market appears to be pricing in a significant growth trajectory. The ROE of 22.99% and ROIC of 15.65% indicate a strong return on equity and invested capital, respectively. The current valuation multiples suggest that the market has high expectations for the company's future performance.

3. NewsRoom

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Touchstone Sands Capital Select Growth Fund Q4 2025 Portfolio Review

Mar -17

Source: seekingalpha.com

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Algert Global LLC Acquires 14,088 Shares of Carpenter Technology Corporation $CRS

Mar -15

Source: defenseworld.net

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Advent International L.P. Has $136.99 Million Stake in Carpenter Technology Corporation $CRS

Mar -15

Source: defenseworld.net

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Top 3D Printing Stocks to Buy Now for Solid Long-Term Returns

Mar -12

Source: zacks.com

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Fieldview Capital Management LLC Makes New Investment in Carpenter Technology Corporation $CRS

Mar -11

Source: defenseworld.net

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Carpenter Technology (CRS) Just Flashed Golden Cross Signal: Do You Buy?

Mar -10

Source: zacks.com

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Mipletamig Delivers Compelling 86% Clinical Benefit Rate and No CRS as Evaluable AML Patient Data increases by Nearly 50%

Mar -10

Source: accessnewswire.com

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Barclays PLC Has $145.36 Million Stock Position in Carpenter Technology Corporation $CRS

Mar -08

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.61%)

6. Segments

Specialty Alloys Operations

Expected Growth: 8.5%

Carpenter Technology Corporation's Specialty Alloys Operations growth of 8.5% is driven by increasing demand for high-performance alloys in aerospace and energy markets, coupled with the company's strategic investments in premium alloy production and expansion into emerging markets, resulting in higher sales volumes and improved pricing power.

Performance Engineered Products

Expected Growth: 9.5%

Carpenter Technology Corporation's 9.5% growth in Performance Engineered Products is driven by increasing demand for high-performance alloys in aerospace and energy markets, coupled with the company's strategic investments in additive manufacturing and expansion into emerging markets, resulting in improved product offerings and enhanced customer relationships.

Intersegment

Expected Growth: 7.0%

Carpenter Technology Corporation's 7.0% intersegment growth is driven by increasing demand for premium alloys in the aerospace and energy industries, coupled with strategic investments in advanced manufacturing technologies and expansion into high-growth markets.

7. Detailed Products

Specialty Alloys

Carpenter Technology Corporation offers a range of specialty alloys used in aerospace, energy, and industrial applications. These alloys provide high strength, corrosion resistance, and durability.

Stainless Steels

The company provides a variety of stainless steel products, including sheet, plate, and bar products, used in food processing, chemical processing, and construction industries.

Titanium Alloys

Carpenter Technology Corporation offers titanium alloys used in aerospace, industrial, and medical applications, providing high strength-to-weight ratio and corrosion resistance.

Powder Metals

The company provides powder metal products, including metal powders and parts, used in aerospace, automotive, and industrial applications.

Additive Manufacturing

Carpenter Technology Corporation offers additive manufacturing services, providing complex parts and components for aerospace, industrial, and medical applications.

Soft Magnetics

The company provides soft magnetic alloys and components used in electrical engineering, automotive, and industrial applications.

8. Carpenter Technology Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Carpenter Technology Corporation's products are specialized and have few substitutes, but the company still faces some competition from alternative materials.

Bargaining Power Of Customers

Carpenter Technology Corporation's customers are diverse and have limited bargaining power, as they are dependent on the company's specialized products.

Bargaining Power Of Suppliers

Carpenter Technology Corporation's suppliers have some bargaining power due to the specialized nature of the company's products, but the company's large scale of operations helps to mitigate this power.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the specialty metals industry, including the need for significant capital investment and technical expertise.

Intensity Of Rivalry

The specialty metals industry is highly competitive, with several established players competing for market share, leading to a high intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 33.46%
Debt Cost 10.04%
Equity Weight 66.54%
Equity Cost 11.30%
WACC 10.87%
Leverage 50.29%

11. Quality Control: Carpenter Technology Corporation passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Mueller Industries

A-Score: 6.4/10

Value: 4.3

Growth: 7.1

Quality: 7.9

Yield: 2.0

Momentum: 9.0

Volatility: 8.0

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AZZ

A-Score: 6.1/10

Value: 6.8

Growth: 6.8

Quality: 6.7

Yield: 2.0

Momentum: 7.0

Volatility: 7.3

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Worthington Industries

A-Score: 5.3/10

Value: 3.9

Growth: 3.1

Quality: 5.9

Yield: 4.0

Momentum: 8.5

Volatility: 6.3

1-Year Total Return ->

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Carpenter Technology

A-Score: 5.0/10

Value: 1.2

Growth: 7.3

Quality: 6.9

Yield: 1.0

Momentum: 9.5

Volatility: 4.0

1-Year Total Return ->

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ATI

A-Score: 4.7/10

Value: 1.6

Growth: 6.6

Quality: 5.8

Yield: 0.0

Momentum: 9.5

Volatility: 4.7

1-Year Total Return ->

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ESAB

A-Score: 3.9/10

Value: 3.1

Growth: 4.7

Quality: 5.9

Yield: 0.0

Momentum: 3.5

Volatility: 6.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

362.4$

Current Price

362.4$

Potential

-0.00%

Expected Cash-Flows