Strong Momentum in Precision Castparts Corp.

Precision Castparts Corp. (PCP) manufactures metal components and products for aerospace, power generation, general industrial and automotive markets. It operates in three segments: Investment Cast Products, Forged Products and Fastener Products. Also, the company was added to the S&P 500 in late May.

On May 9, the Zacks #1 Rank stock reported fiscal fourth-quarter earnings of $1.39 per share, up from 74 cents in the year-ago period and 12 cents above expectations. Continued strength in the commercial aerospace market drove revenues to $1,546 million, up 64% from the prior-year. All segments reported double-digit percentage increases in revenues. Investment Cast Products reported a 13.5% increase in sales to $477.3 million. Forged Products increased fourth quarter sales by 201.5% to $727.8 million. Lastly, the Fastener Products segment reported sales of $341.4 million, up 21.8% from last year.

A portion of the company’s most recent profits have been due to a successful acquisition strategy. Mark Donegan, CEO, commented, “Special Metals has certainly performed well beyond our initial projections and we have solid plans in place for continued upside. The company will remain relentlessly focused on cash…providing a solid platform for further profitable growth.”

On Jun 18, Precision Castparts announced that it will acquire Caledonian Alloys Group, a Scottish company that recycles nickel superalloy and titanium for the aerospace and industrial gas turbine industries. The acquisition is expected to close in the second quarter of fiscal 2008 and will add immediately to earnings.

Following the company’s sixteenth consecutive earnings surprise, full-year fiscal 2008 estimates were increased by 52 cents to $6.04. Since then, estimates have been raised two additional times, most recently by three cents to $6.08. Fiscal 2009 projections have been guiding higher as well and currently stand at $7.02, implying year-over-year earnings growth of 15.5%. Furthermore, the company is ranked number one out of 26 companies in the Aerospace-Defense Equipment category.

Over the last four years, PCP has returned an average of 60.2%. This impressive trend is looking to continue as PCP has climbed over 55% year-to-date and is trading against record highs. In support of renewed momentum, the MACD line made a convincing cross above the signal line on Jul 2: