On Jun 27, 2013,Precision Castparts Corp. (PCP) hit a new 52-week high of $226.94, beating its previous high of $221.90 attained on Jun 18. Precision shares are currently trading at $225.64 as of closing, reflecting a year-to-date return of 16%.
Shares of this leading manufacturer of complex metal components and products have been steadily riding high during the last one year. Recently, the company reported its fourth quarter 2013 results with EPS of $2.82, surpassing the Zacks Consensus Estimate of $2.77 by 1.8%. Quarterly earnings were up 22.1% year over year from $2.31 in the fourth quarter of 2012.
Growth Drivers
Precision has a proven track record of increasing market share through acquisitions and developing new growth opportunities. The company is expected to benefit from the strong free cash flow and enormous funds available that will boost its organic growth.
Precision experienced significant growth in its Aerospace and Forged products divisions in 2013. Currently, the aerospace market looks promising and is expected to grow in the near future. Also, demand in industrial gas turbine (IGT) looks encouraging. The company’s new product, Boeing 787 for The Boeing Company (BA), is also beginning to gain traction.
The company is continually focusing on expanding its product lines and markets. Moreover, Precision completed eight acquisitions in fiscal 2012, which contributed approximately $400 million to sales. With improved sales and a strong market position based on global diversity, Precision is poised to grow organically.
Other Stocks to Consider
Given management’s stellar acquisition track record, new product line and robust free cash flow generation, we have a high conviction that any large deal or collection of smaller deals will continue to be accretive. Hence investors can look forward to improved results in coming quarter and continue holding the stock.
Presently, Precision has a Zacks Rank #3 (Hold). Some other companies of the same sector worth considering at the moment are NSKLtd. (NPSKY) which has a Zacks Rank #1 (Strong Buy), and Norsk Hydro ASA (NHYDY) has a Zacks Rank #2 (Buy) each.
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