Declining oil prices affected recent earnings, but this company just received a glowing endorsement as a “bargain” in Barron’s.
Precision Castparts’ (PCP)
from Hendershot Investments
For fiscal 2015, Precision Castparts’ (PCP) sales increased 5% to $10 billion with net income declining 14% to $1.5 billion and EPS falling 10% on fewer shares outstanding to $10.77.
The company faced sizable challenges in its oil and gas and pipe markets which had a negative impact on its financial results. Precision Castparts generated a 14% return on shareholders’ equity during fiscal 2015.
Precision Castparts returned $1.6 billion to shareholders during the year primarily through share repurchases. The Board recently added $2 billion to the share repurchase authorization with a target completion date of 12 to 18 months.
Looking ahead to fiscal 2016, management expects sales in the $10 to $10.4 billion range, representing 0% to 4% year-over-year growth. Operating margins are expected in the 26.6% to 27.3% range, with EPS from continuing operations in the $12.50 to $13.40 range, down 1% to up 6% from fiscal 2015. Free cash flow is expected in the $1.4 to $1.5 billion range, after $550 million in capital expenditures. Buy.
Ingrid R. Hendershot, Hendershot Investments, www.hendershotinvestments.com, 703-361-6130,