Tags: PCP | aerospace | manufacturing | stocks

Precision Castparts Gains on Recovery

By    |   Friday, 29 Jul 2011 10:49 AM

If there's any one sector that's showing real signs of recovery, it's the manufacturing sector. That's good news for the companies that supply them, including Precision Castparts (PCP), which makes cast metal parts for use in the aerospace, industrial, defense and automobile industries.

Company revenue hit $1.68 billion in its most recent quarter, an increase of 16 percent on the year.

Net income in the quarter rose to $286 million, or $1.97 per share, from $235 million, or $1.64 per share, in the same quarter a year earlier.

Demand in the aerospace sector is particularly paying off. "I think Q1 was certainly a forward step on sales and operating performance, but I think it is a step to a kind of a long road of opportunities we have moving forward," says Chairman and CEO Mark Donegan, speaking to investors.

“If I look at the key drivers, year-on-year, aerospace, we've continued to claw and scratch for any and every opportunity that's available to us kind of in our non-core products, and that resulted in a 3 percent growth rate versus last year,” Donegan told investors later in the call.

Robust cash flow

Good financial management and an improving aerospace industry have analysts happy with Precision. Moody's, for example, upgraded the company’s debt ratings in late 2010 and assigned a stable outlook.

"The actions reflect Moody's expectation that PCP's revenue and earnings will begin to strengthen as activity levels in its key end-markets of aerospace and power generation improve. Moody's also anticipates that PCP's free cash flow will remain robust," Moody's analysts say in a report.

Rising input costs, however, could pressure revenue, the agency cautions. "Recent end-market conditions and metal prices have pressured PCP's top line," although demand from most of the company's markets is picking up, Moody's adds.

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If there's any one sector that's showing real signs of recovery, it's the manufacturing sector. That's good news for the companies that supply them, including Precision Castparts (PCP), which makes cast metal parts for use in the aerospace, industrial, defense and...
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2011-49-29
Friday, 29 Jul 2011 10:49 AM
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