Value
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.8 |
| P/S | 7.1 |
| EV/EBITDA | 1.4 |
| Fwd P/E | 6.8 |
| PEG | 9.7 |
| Analyst target | 9.0 |
- ▸Forward P/E: 18.7x
- ▸PEG: 0.55
CRS · Why this verdict
Why Carpenter Technology Corporatio (CRS) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
Show full disclosure ▾Hide full disclosure ▴
About TrendMatrix. TrendMatrix is a publisher of general securities research and market commentary. We publish on a regular schedule. All content is the same for every subscriber in a tier — we do not provide personalized investment advice and we do not take into account any individual subscriber's financial situation, investment objectives, risk tolerance, tax situation, or holdings.
Not investment advice. TrendMatrix is not a registered investment adviser. Our content is for informational and educational purposes only. Consult your own licensed investment adviser, broker, or tax professional before making any investment decision.
Conflicts and positions. People who build TrendMatrix, or entities they control, may hold positions, long or short, in securities it covers, and may trade them at any time. Positions are not disclosed individually. Verdicts are generated by an automated model applied by the same rules to every covered stock, and are not adjusted for any position held by the people who build TrendMatrix. We do not accept payment from issuers for coverage.
No paid promotion. TrendMatrix does not accept payment from any issuer, broker, or third party in exchange for coverage of any security.
No fiduciary duty. No fiduciary, advisory, or agency relationship is created between you and TrendMatrix by reading our content or subscribing to our service.
Performance. Past performance is not indicative of future results. Performance figures reflect the published model only and do not reflect any individual subscriber's actual results.
VerdictSELL
Overall score5.9/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
A high-quality industrial compounder with four consecutive earnings beats and strong financial health metrics that has already exceeded its price target; the elevated forward earnings multiple of 44.5 times, overbought technical readings, and below-average free cash flow conversion suggest the near-term setup favors patience over new capital deployment.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The business has beaten EPS estimates in each of the last four quarters with an average positive surprise of approximately 7%, while maintaining operating margins of approximately 16% and a Piotroski financial health score of 8 out of 9 — the hallmarks of a well-managed industrial franchise with consistent execution. Earnings | The beat streak extends to at least 6 consecutive quarters and operating margins hold above 14% over the next year. | ↓Deteriorating |
| CounterSteady beats with moderate surprise magnitude can reflect conservative guidance discipline as much as operational strength; if industrial end markets soften, the beat pattern may break without a corresponding deterioration in the underlying franchise quality. | ||
At a forward price-to-earnings multiple of 44.5 times — a level that screens as expensive relative to the sector — with the stock already trading above its identified price target, the current level appears to have fully priced the near-to-medium term earnings outlook with little margin of safety remaining. Valuation breakdown | If the multiple is justified by growth, forward earnings estimates would need to rise enough to compress the forward P/E below 25 times over the next four quarters. | Tripped↑Improving |
| CounterA PEG ratio of 0.94 suggests that once growth is incorporated, the multiple sits near fair value; continued earnings upgrades could make the apparent richness look temporary in hindsight. | ||
The RSI has reached 92, deep in overbought territory, while on-balance volume has been declining — suggesting that recent price appreciation has been driven by thinning participation, a setup that historically precedes consolidation or a short-term correction. Momentum breakdown | RSI normalizes below 70 over 4-6 weeks as price consolidates, and on-balance volume turns upward, creating a healthier technical foundation for the quality story to continue. | ↑Improving |
| CounterOverbought RSI readings can persist in strongly trending markets, particularly when short interest is modest; an overbought reading alone is not sufficient reason to exit a high-quality business with consistent earnings delivery. | ||
Free cash flow is converting at approximately 63% of net income — below the level typically associated with high-confidence earnings quality — suggesting reported earnings may be outpacing the cash actually available for shareholders or reinvestment. Quality breakdown | FCF conversion rises above 90% of net income for 2 consecutive quarters, confirming that the earnings quality concern has resolved. | →Stable |
| CounterA 63% FCF-to-net-income conversion is not unusual for capital-intensive industrial businesses; if the shortfall reflects deliberate capital investment rather than a structural earnings-quality issue, it may improve naturally as those programs wind down. | ||
The business has beaten EPS estimates in each of the last four quarters with an average positive surprise of approximately 7%, while maintaining operating margins of approximately 16% and a Piotroski financial health score of 8 out of 9 — the hallmarks of a well-managed industrial franchise with consistent execution.
↓DeterioratingEarnings
- Expectation
- The beat streak extends to at least 6 consecutive quarters and operating margins hold above 14% over the next year.
CounterSteady beats with moderate surprise magnitude can reflect conservative guidance discipline as much as operational strength; if industrial end markets soften, the beat pattern may break without a corresponding deterioration in the underlying franchise quality.
At a forward price-to-earnings multiple of 44.5 times — a level that screens as expensive relative to the sector — with the stock already trading above its identified price target, the current level appears to have fully priced the near-to-medium term earnings outlook with little margin of safety remaining.
Tripped↑ImprovingValuation breakdown
- Expectation
- If the multiple is justified by growth, forward earnings estimates would need to rise enough to compress the forward P/E below 25 times over the next four quarters.
CounterA PEG ratio of 0.94 suggests that once growth is incorporated, the multiple sits near fair value; continued earnings upgrades could make the apparent richness look temporary in hindsight.
The RSI has reached 92, deep in overbought territory, while on-balance volume has been declining — suggesting that recent price appreciation has been driven by thinning participation, a setup that historically precedes consolidation or a short-term correction.
↑ImprovingMomentum breakdown
- Expectation
- RSI normalizes below 70 over 4-6 weeks as price consolidates, and on-balance volume turns upward, creating a healthier technical foundation for the quality story to continue.
CounterOverbought RSI readings can persist in strongly trending markets, particularly when short interest is modest; an overbought reading alone is not sufficient reason to exit a high-quality business with consistent earnings delivery.
Free cash flow is converting at approximately 63% of net income — below the level typically associated with high-confidence earnings quality — suggesting reported earnings may be outpacing the cash actually available for shareholders or reinvestment.
→StableQuality breakdown
- Expectation
- FCF conversion rises above 90% of net income for 2 consecutive quarters, confirming that the earnings quality concern has resolved.
CounterA 63% FCF-to-net-income conversion is not unusual for capital-intensive industrial businesses; if the shortfall reflects deliberate capital investment rather than a structural earnings-quality issue, it may improve naturally as those programs wind down.
Per-dimension breakdown
Quality
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 9.3 |
| ROA | 8.6 |
| Gross margin | 2.2 |
| Op margin | 9.9 |
| Net margin | 8.9 |
| Current ratio | 9.1 |
| FCF quality | 3.0 |
| Moat | 6.1 |
| Piotroski F | 10.0 |
- ▸Excellent ROE: 28%
- ▸Strong margins: 18%
- ▸Earnings quality RED FLAG: 37% FCF/NI
- ▸Strong Piotroski F-Score: 9/9
Growth
6.7/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.7 |
| EPS growth | 8.7 |
Momentum
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.0 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 2.2 |
| Volume | 7.9 |
- ▸Capitulation risk (RSI 20, below 200MA)
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA but MA still rising (+1.6%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 2.5 |
| Analyst rating | 6.7 |
| Price target | 9.4 |
- ▸LLM news sentiment: -0.50 (n=1)
- ▸Light analyst coverage (7.0) — signal dampened
- ▸Analyst upside: 47%
Insider
3.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 3.0 |
| insider conviction | 2.0 |
| holder change | 5.0 |
- ▸Notable insider selling — $54,644,372 (0.369% of mkt cap)
Peer rank
4.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.8 |
| quality rank | 8.9 |
| growth rank | 0.0 |
- ▸Superior ROE vs peers
- ▸Best-in-class margins
Technical
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 8.1 |
| support resistance | 8.0 |
| 52w position | 0.0 |
Risk (lower is worse)
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.6 |
| days to cover | 9.2 |
| volatility | 0.0 |
| put call | 5.6 |
| implied vol | 4.3 |
| max pain risk | 3.0 |
| beta | 5.8 |
| debt equity | 8.7 |
| news risk | 6.0 |
- ▸Above max pain $270
Catalyst
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 5.2 |
| dividend safety | 6.8 |
| news activity | 5.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:4.6>=4.5
- ASYMMETRY:2.0>=1.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:89d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (2)
- MOMENTUM:4.6<5.5 (soft — BUY_NOW allowed but watch)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
1.99
Upside
+27.6%
Downside
13.8%
Sizing output
AVOID
SetupOversold Bounce — Oversold RSI 20, near Bollinger lower, volume surge
EdgeNo clear edge — No clear edge identified
SuitabilitySpeculative — Drawdown -52% (>40% off 52w high)
Investment implication
The F-path SELL output reflects an overall score of 5.4 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Quality at 7.5) was not enough to lift the adjusted overall above the threshold. Current asymmetry R:R is 1.99 — supplementary context, not the trigger for this path.
The strongest dimensions are Quality at 7.5, Value at 6.9, and Growth at 6.7; the weakest are Insider at 3.3, Peer rank at 4.2, and Momentum at 4.6. The V9 engine cleared all gates with 2 warnings, producing an asymmetric reward-to-risk of 1.99 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1High Quality Earnings Compounder
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2Stretched Valuation Above TargetTripped
Trip ifForward P/E multiple compresses below 20x from the current 44.5x, driven by earnings estimate upgrades outpacing price appreciation.
- P3Overbought Technicals Falling Volume
Trip ifRSI falls below 55 and on-balance volume turns positive (rising) for 3 consecutive weeks.
- P4Fcf Conversion Below Earnings Quality Bar
Trip ifFCF conversion rises above 90% of net income for 2 consecutive quarters.