Precision Hits 52-Week High - Analyst Blog

On May 9, 2013, shares of Precision Castparts Corp. (PCP) hit a new 52-week high of $211.89 beating its previous high of $196 attained on Mar 20 with 2,019,100 shares traded. The average volume traded during the last three month totaled 622,521 shares. This huge volume of shares traded on that day, caused the price to rise high.

The company’s current forward P/E ratio is 16.1 above the S&P 500 companies P/E ratio of 15.10. The shares are currently trading at 206.68 as of closing on May 09, with a year-to-date return of 1.4%. Let us try to gauge the factors that propelled the stock to its 52-week high.

Growth Drivers

Precision Castparts experienced significant growth in its Aerospace and Forged products 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 is also beginning to gain traction. During fiscal 2013, revenue reached a record level of $2.44 billion. As per the Zacks Consensus Estimate, the company has a sales growth expectation of 2.15%

The company is continually focusing on expanding its product lines and markets. Precision Castparts completed eight acquisitions in fiscal 2012, the most recent being the rings operations of Unison Engine Components from GE Aviation of General Electric Company.

These acquisitions contributed approximately $400 million to sales in fiscal 2012. With improved sales and strong market position based on global diversity, Precision Castparts is poised to grow organically. As per the Zacks Consensus Estimate, the company has an earnings growth expectation of 13.48%.

In addition, Precision Castparts reported fourth quarter 2013 earnings per share of $2.82, 1.8% above the Zacks Consensus Estimate of $2.77. There was also record high sales growth of 25% year over year. This growth was primarily attributable to year-over-year growth in commercial OEM (Original equipment manufacturer) aerospace demand and steady improvement in IGT spares. There was also a notable improvement in oil and gas downhole casing production, coupled with a full quarter of strong Timet performance.

Other Stocks to Consider

Presently Precision Castparts has a Zacks Rank #2 (Buy). Some other companies of the industry worth considering at the moment are NSK Ltd. (NPSKY), which has a Zacks Rank #1. Others, like Norsk Hydro ASA (NHYDY) and Northwest Pipe Co. (NWPX) have Zacks Rank #2 (Buy) each.

NORSK HYDRO ADR (NHYDY): Get Free Report

NSK LTD -UN ADR (NPSKY): Get Free Report

NORTHWEST PIPE (NWPX): Free Stock Analysis Report

PRECISION CASTP (PCP): Free Stock Analysis Report

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