Carpenter Technology Is Down About 39% From Its June High Despite Record Profits: What Bulls and Bears Are Weighing Before October 22 Earnings

Carpenter Technology, which makes the specialty alloys used in jet engines, aircraft structures and defense systems, just posted the most profitable year in its history. The stock has gone the other way. Shares were at $378.52 at 1:16 PM ET Wednesday, about 39% below the roughly $617 high on June 30 by our calculation, and down 13.7% over six months. With the company due to report September-quarter results on October 22, investors are weighing a strong growth story against a stretched valuation, heavy insider selling and a softer near-term outlook.

The stock has fallen in steps

The slide began when fiscal fourth-quarter results arrived on July 30. Adjusted earnings of $3.23 a share beat estimates of about $3.07 to $3.09, but revenue of $851 million missed the roughly $862 million forecast. Investing.com reported shares fell 4.55% premarket, saying investors seemed to focus on the revenue miss and the stock's strong run. No source gave a definitive reason. By our calculation the shares traded at about 49 times fiscal 2026 adjusted earnings of $10.76 before the report and about 35 times today.

The business is still growing

Fiscal 2026, which ended June 30, brought operating income of $702.0 million, up 34% from an adjusted $525.4 million, on sales of $3.12 billion. Adjusted free cash flow rose to $362.3 million. The Specialty Alloys segment earned a record 37.8% adjusted operating margin in the fourth quarter. Aerospace and defense sales rose 17% from a year earlier and engine sales rose nearly 30%, with aircraft makers working through a backlog of about 16,000 planes, according to the company's call. Management said the fiscal 2027 outlook is not the peak of the company's earnings potential and reiterated a fiscal 2029 operating income target of $1.2 billion to $1.3 billion.

Not every end market is strong. Medical sales fell 30% from a year earlier, energy sales fell 22% from the prior quarter, and some structural aerospace customers are ordering below expected demand, though management expects a pickup. The first-quarter operating income guide of $195 million to $200 million is also below the fourth quarter's record $206.9 million, a sequential step down that may explain some of the caution.

The bull case

Growth and capacity. The company's brownfield capacity expansion is on budget and on schedule to finish at the start of fiscal 2028, and management said it could add about $150 million of annual operating income by fiscal 2030. Cash returns. On August 12, Carpenter authorized a new $1.0 billion share repurchase program after buying back the final $119 million of its prior $400 million authorization in August. That is roughly 5% of the company's $18.76 billion market value, per MarketBeat, though the company is not required to buy any set amount and no purchases under the new plan have been reported. Liquidity was $892.4 million and net debt to EBITDA was well below 1x. Analyst support. MarketBeat lists a Moderate Buy consensus, with eight buy ratings and two holds, an average target of $526.88, a high of $700 and a low of $400. The shares trade below even the lowest target, although targets can lag a falling price.

The bear case

Valuation. At about 35 times trailing earnings and roughly 28 times forward earnings, per MarketBeat, the stock still prices in a lot of growth after a multi-year run. Insider and institutional selling. MarketBeat reported insiders sold about $54.6 million of stock over three months and bought none. CEO Tony Thene disclosed an August 25 sale of 109,283 shares, which Quiver Quantitative said was for estate planning, tax planning and diversification. Quiver's analysis of 13F filings also showed Egerton Capital eliminating its 1.33 million-share position in the second quarter. Leadership. CEO Brian Malloy died unexpectedly shortly after taking the role on July 1, and Thene returned as CEO, saying the appointment is not interim. Macro. The 10-year Treasury yield rose about 10 basis points to 5.31% on Wednesday's hot inflation report, which tends to pressure richly valued stocks. Execution. Slower structural orders or a delay in the expansion would put the fiscal 2028 and 2030 targets at risk.

What the earnings record shows

Carpenter has beaten earnings estimates in each of the last eight quarters, according to the earnings data we reviewed, and the September-quarter estimate of $3.04 would be up about 25% from $2.43 a year earlier. The size of the beats has narrowed, however, from 14.1% in September 2025 to between 4.5% and 5.3% in the last three quarters. With the stock already down sharply, the bar for October 22 may be lower than it was in July, but a revenue miss or a weak outlook could test it again.