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Investing.com -- Shares of Carpenter Technology (NYSE:CRS) fell 6.7% as the company reported second-quarter revenue that missed analyst expectations. Despite surpassing earnings per share (EPS) estimates by $0.04, with a reported EPS of $1.66 against the forecasted $1.62, the company’s revenue of $676.9 million fell short of the consensus estimate of $724.42 million.
The company highlighted its record operating income of $118.9 million for the fiscal second quarter ended December 31, 2024, representing a 70% increase YoY. However, the shortfall in revenue appears to have overshadowed this achievement in the eyes of investors. The company’s net sales for the quarter increased by 8% YoY, but this was accompanied by a 6% decrease in shipment volume.
Carpenter Technology also reported a substantial improvement in its operating income compared to the same period last year, which was $69.8 million. The current quarter’s adjusted operating margin in the Specialty Alloys Operations (SAO) segment increased significantly to 28.3%, up from 20.0% YoY. This marks the twelfth consecutive quarter of increasing adjusted operating margins in the SAO segment.
The company generated $67.9 million in cash from operating activities and $38.6 million of adjusted free cash flow. Additionally, Carpenter Technology executed $8.2 million in share repurchases against a $400.0 million repurchase authorization.
Looking forward, Carpenter Technology raised its operating income expectations for fiscal year 2025 to a range of $500 million to $520 million, up from the high end of the previous range of $460 million to $500 million. The company also projects $250 million to $300 million in adjusted free cash flow for the fiscal year and anticipates operating income between $126 million and $134 million for the third quarter of fiscal year 2025.
Analysts provided mixed reactions to the company’s financial performance. TD Cowen analyst Gautam Khanna commented, "Q2 operating performance was in-line, with EPS ahead on lower tax rate. CRS raised F25 guidance, and plans an investor update on 2/18 that will offer a longer-term financial outlook. Stock had high expectations going-in, so we don’t expect much follow-through on the inline Q2." Keybanc analyst Philip Gibbs noted that volumes were lighter than expected, which was partially offset by favorable pricing and mix in both segments.
Carpenter Technology plans to host a virtual Investor Update Event on February 18, 2025, to provide a general business update and a financial outlook beyond fiscal year 2025.
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