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Why Precision Castparts Earnings Should Fly Higher

Dan Caplinger
July 23, 2013

Precision Castparts (NYSE: PCP) will release its quarterly report on Thursday, and judging from the movement of its stock, investors are expecting good results. With activity in the aerospace industry helping the aircraft components maker's business, Precision Castparts earnings look poised to produce strong growth both this quarter and well into the future.

Precision Castparts actually has a much wider scope than aerospace, serving the auto, medical, and chemical industries as well with a variety of cast and forged metal component offerings. Yet with general weakness in the global economy in many industrial businesses, Precision is undoubtedly benefiting from the relative strength in aircraft demand. Let's take an early look at what's been happening with Precision Castparts over the past quarter and what we're likely to see in its quarterly report.

Stats on Precision Castparts

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$2.52 billion

Change From Year-Ago Revenue


Earnings Beats in Past Four Quarters


Source: Yahoo! Finance.

How will Precision Castparts earnings fare this quarter?
Analysts have gotten more optimistic about Precision Castparts and its earnings prospects in recent months, boosting their June-quarter estimates by a nickel per share and raising full-year fiscal 2014 and 2015 views by about $0.20 per share each. The stock has reflected that enthusiasm, rising almost 30% since mid-April.

Precision started the quarter off on a positive note, with a strong earnings report in May from its previous quarter. Precision's soaring revenue growth on the back of its acquisition of Titanium Metals didn't quite match up to more aggressive expectations from analysts, but earnings growth of 23% beat estimates and helped send the shares up sharply.

Two moves from Precision during the quarter showed the company's commitment toward improving its strategic position within the industry. The biggest was its announced $600 million acquisition of Permaswage late last month, which designs and makes aerospace fluid fittings. With expectations that the buyout will immediately boost earnings once it closes, the move accentuates the huge opportunity that Precision sees in the aerospace industry. But it also sold off its Primus Composites division to Triumph Group (NYSE: TGI), showing Precision's willi