CRS · Carpenter Technology
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $370.57
Note written ·
Price against the kill line
21.3% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $370.57, on record since 11 November 2026. The shares are down 46.2% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $370.57, the 50-day average of closes (11 November 2026), would show the shares leading the S&P 500 and prove this call wrong.
Research onlyNot in the portfolio.
Catalyst
Key figures from the filings · Materials
Quarter to 30 September 2026, filed 22 October 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 798
- Revenue, change on a year (%)
- +8.8
- Gross margin (%)
- 32.1
- Operating margin (%)
- 24.6
- Free cash flow, four quarters ($M)
- 341
- Net cash, cash less debt ($M)
- −532
- Price to earnings (×)
- 25.4
- Enterprise value to sales (×)
- 4.7
All filed numbers
What Carpenter Technology reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 798 | +8.8 | 32.1 | 24.6 |
| first filed | 851 | +12.6 | 31.6 | 24.3 |
| first filed | 812 | +11.6 | 31.0 | 23.0 |
| first filed | 728 | +7.5 | 30.0 | 21.3 |
| first filed | 734 | +2.2 | 29.5 | 20.9 |
| first filed | 756 | −5.4 | 28.3 | 20.0 |
| Pre-tax income ($M) | 192 |
| Net income ($M) four quarters: 570 | 163 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | −0.8 |
| Operating cash flow ($M) | 619 |
| Capital spending ($M) | 278 |
| Free cash flow ($M) | 341 |
| Cash and short-term investments ($M) | 160 |
| Debt ($M) non-current long-term debt | 691 |
| Net cash, cash less debt ($M) | −532 |
| Deferred revenue ($M) −33.8% on a year | 5.1 |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 722 |
| Inventory ($M) | 884 |
| Shareholders' equity ($M) | 2,183 |
| Market value ($M) | 14,445 |
| Enterprise value, market value plus net debt ($M) | 14,976 |
| Enterprise value to sales (×) | 4.7 |
| Enterprise value to operating income (×) | 20.1 |
| Price to earnings (×) | 25.4 |
| Price to book value (×) | 6.6 |
| Free-cash-flow yield (%) | 2.4 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 2.7% of shares outstanding sold short, 1.9 days of average trading to cover, −8.5% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $54.6M |
| 12 monthsfrom | $0 | $94.6M |
The thesis
Carpenter Technology still guides fiscal 2027 operating income of $850–880 million, but the shares closed at $297.37 on 10 November 2026, 51.9% below the 52-week high of $618.66, and the case is more likely to lag the S&P 500 than lead it over the next three months. The second-quarter fiscal 2027 report, expected around late January 2027, decides whether the $192–197 million operating income guide holds.
Nothing in the business has changed since the 22 October 2026 results. The company's 10 November 2026 press release named Marshall Akins Senior Vice President and Chief Operating Officer, John Huyette Chief Commercial Officer and Bill Besash head of investor relations and corporate development. The close of $297.37 compares with $280.0 on 28 October 2026, and the 14-day relative strength index (RSI) was 32.2 on 10 November 2026 against 8.0 on 28 October 2026. The narrative is saturated on the downside: coverage since the report is mostly downgrades and target cuts, and the new selling has eased.
Bullish and bearish views on Carpenter Technology Corp
The bull case on Carpenter Technology Corp (CRS), in brief: guidance was held. The bear case: sales missed and underlying sales fell.
Bull case
- Guidance was held. The company reaffirmed fiscal 2027 operating income of $850–880 million on 22 October 2026, which it describes as 21% to 25% growth over fiscal 2026. First-quarter operating income of $196.4 million was up 28% from a year earlier.
- Aerospace orders accelerated. Aerospace structural and distribution bookings rose 23% from the prior quarter and 49% from a year earlier, per the 22 October 2026 results release. CEO Tony Thene said pricing continues to strengthen.
- Margins in the main unit are higher. Specialty Alloys Operations reported an adjusted operating margin excluding surcharge of 37.7%, up from 32.0% a year earlier, per the 22 October 2026 release.
- The company is repurchasing shares. It bought 241,924 shares for $133.9 million in the quarter ended 30 September 2026, per its 8-K, and had $985.0 million remaining under the $1.0 billion program authorized 12 August 2026.
- Operating bench was deepened. The 10 November 2026 appointments fill the chief operating officer and chief commercial officer roles under Thene, who is chairman, president and chief executive officer.
Bear case
- Sales missed and underlying sales fell. Net sales of $798.2 million missed the $830.8 million estimate, per Benzinga on 22 October 2026. Sales excluding surcharge of $634.8 million compare with $679.7 million in the fourth quarter of fiscal 2026.
- The next quarter is guided lower. Second-quarter operating income is guided to $192–197 million, below the $196.4 million of the first quarter at the midpoint and below the record $206.9 million of the fourth quarter.
- Cash flow turned more negative. Free cash flow was negative $24.8 million, versus negative $3.4 million a year earlier. Capital spending rose to $77.7 million from $42.6 million on the brownfield expansion, per the 8-K.
- Analysts cut and downgraded. KeyBanc moved to Sector Weight on 26 October 2026. Deutsche Bank's $361 target on 23 October 2026 compares with $555 before.
- Leadership has turned over twice in 2026. Tony Thene returned as chief executive on 26 July 2026 after the death of Brian Malloy, per the fiscal 2026 10-K, and the operating and investor-relations roles changed hands again on 10 November 2026.
Price setup
The adjusted close on 10 November 2026 was $297.37. The 52-week high is $618.66, and the three-month change is −44.4%, per split and dividend-adjusted daily bars. The 14-day RSI of 32.2 is above the 8.0 reading of 28 October 2026, so the selling has slowed without the shares reclaiming the August range.
The $240 level is a round figure under the 28 October 2026 close of $280.0. It sits 19% below the current close. Crowding evidence is light: no earnings date falls inside 30 days, and the visible attention is analyst downgrades and a law-firm investigation notice dated 26 October 2026, not new retail buying.
Catalysts ahead
- ~16 November 2026 (est.): 13F institutional holder filings for the quarter ended 30 September 2026. Shows whether large holders reduced stakes during the decline that followed the August peak.
- 31 December 2026: Second fiscal quarter of 2027 ends. Closes the period for which operating income is guided at $192–197M.
- ~29 January 2027 (est.): Second-quarter fiscal 2027 results. Tests the $192–197M operating income guide, the $850–880M annual outlook and whether sales excluding surcharge recover from $634.8M.
What would change the view
A daily close above $370.57, the 50-day average of closes (11 November 2026), would show the shares leading the S&P 500 and prove this call wrong.
What it trades with
Carpenter sells titanium and nickel superalloys into jet engines, defense and medical uses, so its shares move with aerospace and defense sentiment. The 29 September 2026 defense-group losing streak and the post-report decline both fed the fall. Carpenter was removed from Russell value and midcap benchmarks in the 2026 reconstitution, so index-related flows recur at rebalance dates regardless of company news.
The evidence, claim by claim (8)
- First-quarter fiscal 2027 operating income $196.4M, up 28% year over year; diluted EPS $3.25; net sales $798.2M, or $634.8M excluding surcharge. Company Q1 FY27 results (SEC Form 8-K) · as of
- Second-quarter fiscal 2027 operating income guided to $192–197M; fiscal 2027 operating income of $850–880M maintained. Company Q1 FY27 results (SEC Form 8-K) · as of
- Net sales of $798.2M missed the $830.771M estimate; EPS of $3.25 compared with a $3.14 estimate. Benzinga earnings report · as of
- Aerospace structural and distribution bookings rose 23% sequentially and 49% year over year. Company Q1 FY27 results release · as of
- Free cash flow negative $24.8M; capital expenditures $77.7M; 241,924 shares repurchased for $133.9M in the quarter. Company Q1 FY27 results (SEC Form 8-K) · as of
- Deutsche Bank cut its price target to $361 from $555; BTIG kept Buy with a $470 target; KeyBanc downgraded to Sector Weight on 26 October 2026. Benzinga analyst-action reports · as of
- Marshall Akins named Senior Vice President and Chief Operating Officer; John Huyette named Chief Commercial Officer; Bill Besash named Vice President of Investor Relations and Corporate Development. Company press release via GlobeNewswire · as of
- Adjusted close of $297.37, 51.9% below the $618.66 52-week high; three-month change −44.4%; 14-day RSI 32.2. Split/dividend-adjusted daily bars · as of
Sources
- Carpenter Technology Corporation Announces Senior Leadership Appointments · globenewswire.com ·
- Carpenter Technology Corporation Announces Senior Leadership Appointments · manilatimes.net ·
- Carpenter Technology Corp - Form 10-K - FY2026 · sec.gov
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