Precision Castparts Corp Earnings Cheat Sheet: Five Straight Quarters of Double-Digit Growth

S&P 500 (NYSE:SPY) component Precision Castparts Corp (NYSE:PCP) reported its results for the second quarter. Precision Castparts manufactures complex metal components and products and provides investment castings, forgings, and fastener systems for aerospace and industrial gas turbine applications.

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Precision Castparts Earnings Cheat Sheet for the Second Quarter

Results: Net income for Precision Castparts rose to $294.7 million ($2.03 per share) vs. $251 million ($1.75 per share) in the same quarter a year earlier. This marks a rise of 17.4% from the year earlier quarter.

Revenue: Rose 18.7% to $1.79 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: PCP was about in line with expectations as the mean analyst estimate of $2.04 per share. Analysts were expecting revenue of $1.77 billion.

Quoting Management: “Right now, all the signposts in our businesses are pointed in the right direction, toward increasing sales and improving profitability,” said Mark Donegan, chairman and chief executive officer of Precision Castparts Corp. “The announced increases in the commercial aircraft build rates are beginning to work into our casting and forging delivery schedules and start to ramp up in the latter half of the year. Of course, the most significant catalyst to our commercial aerospace growth is the 787 program, and we will support Boeing schedules as they firm up. In order to get ahead of this growth, we have started to hire in some of our operations and are pulling forward some capital investment, particularly in our airfoils business, which we had not anticipated adding for another year. The fastener business continues to lag this aerospace recovery; the bottom is definitely behind us, however, and the order books are gaining steady traction over the next three to four quarters.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 16.5%, with the biggest boost coming in the most recent quarter when revenue rose 18.7% from the year earlier quarter.

The company has now seen net income rise in three straight quarters. In the first quarter, net income rose 21.7% and in the fourth quarter of the last fiscal year, the figure rose 12.4%.

The company fell short of estimates last quarter after beating the mark the quarter before with net income of $1.97 versus a mean estimate of net income of $1.95 per share.

Gross margins grew 0.1 percentage point to 30.7%. The growth seemed to be driven by increased revenue, as the figure rose 18.7% from the year earlier quarter while costs rose 18.4%.

Looking Forward: Expectations for the company’s next quarter performance are higher than they were ninety days ago. Over the past three months, the average estimate for the third quarter has risen to $2.27 per share from $2.17. For the fiscal year, the average estimate has moved up from $8.52 a share to $8.71 over the last ninety days.

Competitors to Watch: MS International plc (NYSE:MSI), Ladish Co., Inc. (NASDAQ:LDSH), Alcoa Inc. (NYSE:AA), Haynes International, Inc. (NASDAQ:HAYN), Allegheny Tech. Inc. (NYSE:ATI), Fansteel Inc. (FELI), Chicago Rivet & Machine Co. (AMEX:CVR), United Technologies Corp. (NYSE:UTX), and Hulamin Limited (HLM).

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(Source: Xignite Financials)