Value
3.2/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 1.8 |
| P/S | 3.5 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 2.5 |
| PEG | 7.1 |
| Analyst target | 3.0 |
- ▸Forward P/E: 46.7x
- ▸PEG: 0.99
CRS · Why this verdict
Why Carpenter Technology Corporatio (CRS) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score5.8/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
A high-quality industrial compounder with four consecutive earnings beats and strong financial health metrics that has already exceeded its price target; the elevated forward earnings multiple of 44.5 times, overbought technical readings, and below-average free cash flow conversion suggest the near-term setup favors patience over new capital deployment.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The business has beaten EPS estimates in each of the last four quarters with an average positive surprise of approximately 7%, while maintaining operating margins of approximately 16% and a Piotroski financial health score of 8 out of 9 — the hallmarks of a well-managed industrial franchise with consistent execution. Earnings | The beat streak extends to at least 6 consecutive quarters and operating margins hold above 14% over the next year. | ↑Improving |
| CounterSteady beats with moderate surprise magnitude can reflect conservative guidance discipline as much as operational strength; if industrial end markets soften, the beat pattern may break without a corresponding deterioration in the underlying franchise quality. | ||
At a forward price-to-earnings multiple of 44.5 times — a level that screens as expensive relative to the sector — with the stock already trading above its identified price target, the current level appears to have fully priced the near-to-medium term earnings outlook with little margin of safety remaining. Valuation breakdown | If the multiple is justified by growth, forward earnings estimates would need to rise enough to compress the forward P/E below 25 times over the next four quarters. | ↓Deteriorating |
| CounterA PEG ratio of 0.94 suggests that once growth is incorporated, the multiple sits near fair value; continued earnings upgrades could make the apparent richness look temporary in hindsight. | ||
The RSI has reached 92, deep in overbought territory, while on-balance volume has been declining — suggesting that recent price appreciation has been driven by thinning participation, a setup that historically precedes consolidation or a short-term correction. Momentum breakdown | RSI normalizes below 70 over 4-6 weeks as price consolidates, and on-balance volume turns upward, creating a healthier technical foundation for the quality story to continue. | ↓Deteriorating |
| CounterOverbought RSI readings can persist in strongly trending markets, particularly when short interest is modest; an overbought reading alone is not sufficient reason to exit a high-quality business with consistent earnings delivery. | ||
Free cash flow is converting at approximately 63% of net income — below the level typically associated with high-confidence earnings quality — suggesting reported earnings may be outpacing the cash actually available for shareholders or reinvestment. Quality breakdown | FCF conversion rises above 90% of net income for 2 consecutive quarters, confirming that the earnings quality concern has resolved. | →Stable |
| CounterA 63% FCF-to-net-income conversion is not unusual for capital-intensive industrial businesses; if the shortfall reflects deliberate capital investment rather than a structural earnings-quality issue, it may improve naturally as those programs wind down. | ||
The business has beaten EPS estimates in each of the last four quarters with an average positive surprise of approximately 7%, while maintaining operating margins of approximately 16% and a Piotroski financial health score of 8 out of 9 — the hallmarks of a well-managed industrial franchise with consistent execution.
↑ImprovingEarnings
- Expectation
- The beat streak extends to at least 6 consecutive quarters and operating margins hold above 14% over the next year.
CounterSteady beats with moderate surprise magnitude can reflect conservative guidance discipline as much as operational strength; if industrial end markets soften, the beat pattern may break without a corresponding deterioration in the underlying franchise quality.
At a forward price-to-earnings multiple of 44.5 times — a level that screens as expensive relative to the sector — with the stock already trading above its identified price target, the current level appears to have fully priced the near-to-medium term earnings outlook with little margin of safety remaining.
↓DeterioratingValuation breakdown
- Expectation
- If the multiple is justified by growth, forward earnings estimates would need to rise enough to compress the forward P/E below 25 times over the next four quarters.
CounterA PEG ratio of 0.94 suggests that once growth is incorporated, the multiple sits near fair value; continued earnings upgrades could make the apparent richness look temporary in hindsight.
The RSI has reached 92, deep in overbought territory, while on-balance volume has been declining — suggesting that recent price appreciation has been driven by thinning participation, a setup that historically precedes consolidation or a short-term correction.
↓DeterioratingMomentum breakdown
- Expectation
- RSI normalizes below 70 over 4-6 weeks as price consolidates, and on-balance volume turns upward, creating a healthier technical foundation for the quality story to continue.
CounterOverbought RSI readings can persist in strongly trending markets, particularly when short interest is modest; an overbought reading alone is not sufficient reason to exit a high-quality business with consistent earnings delivery.
Free cash flow is converting at approximately 63% of net income — below the level typically associated with high-confidence earnings quality — suggesting reported earnings may be outpacing the cash actually available for shareholders or reinvestment.
→StableQuality breakdown
- Expectation
- FCF conversion rises above 90% of net income for 2 consecutive quarters, confirming that the earnings quality concern has resolved.
CounterA 63% FCF-to-net-income conversion is not unusual for capital-intensive industrial businesses; if the shortfall reflects deliberate capital investment rather than a structural earnings-quality issue, it may improve naturally as those programs wind down.
Per-dimension breakdown
Quality
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 8.3 |
| ROA | 7.6 |
| Gross margin | 1.9 |
| Op margin | 9.1 |
| Net margin | 7.9 |
| Current ratio | 9.3 |
| FCF quality | 4.9 |
| Moat | 6.8 |
| Piotroski F | 8.9 |
- ▸Strong margins: 16%
- ▸Earnings quality warning: 63% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
7.7/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.4 |
| EPS growth | 10.0 |
Momentum
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 8.0 |
| Price target | 4.2 |
| erm sentiment | 4.3 |
- ▸Light analyst coverage (9.0) — signal dampened
Insider
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Modest insider selling — $6,623,475 (0.022% of mkt cap)
- ▸Institutions accumulating
Peer rank
5.1/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.3 |
| quality rank | 8.1 |
| growth rank | 5.0 |
- ▸Superior ROE vs peers
Technical
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.0 |
| support resistance | 2.4 |
| 52w position | 9.3 |
Risk (lower is worse)
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.1 |
| days to cover | 8.8 |
| volatility | 3.3 |
| put call | 5.7 |
| implied vol | 2.6 |
| beta | 6.1 |
| debt equity | 8.6 |
- ▸High IV: 65%
Catalyst
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 6.2 |
| dividend safety | 6.8 |
- ▸Perfect beat streak: 4Q
- ▸Earnings in 5 days
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (6)
- MOMENTUM:4.9>=4.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:-1.5=NEGATIVE
- EARNINGS_PROXIMITY:5d<=7d
Warning (1)
- MOMENTUM:4.9<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
-1.50
Upside
-17.7%
Downside
11.8%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:4.9>=4.5. Top dim: Growth at 7.7; weakest: Value at 3.2. No conviction either direction.
The strongest dimensions are Growth at 7.7, Quality at 7.2, and Catalyst at 6.6; the weakest are Value at 3.2, Technical at 4.9, and Momentum at 4.9. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of -1.50 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1High Quality Earnings Compounder
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2Stretched Valuation Above Target
Trip ifForward P/E multiple compresses below 20x from the current 44.5x, driven by earnings estimate upgrades outpacing price appreciation.
- P3Overbought Technicals Falling Volume
Trip ifRSI falls below 55 and on-balance volume turns positive (rising) for 3 consecutive weeks.
- P4Fcf Conversion Below Earnings Quality Bar
Trip ifFCF conversion rises above 90% of net income for 2 consecutive quarters.