Carpenter Technology (CRS) versus POSCO (PKX) Financial Analysis

Carpenter Technology (NYSE: CRS) and POSCO (NYSE:PKX) are both mid-cap basic materials companies, but which is the superior stock? We will contrast the two businesses based on the strength of their profitability, institutional ownership, risk, valuation, analyst recommendations, dividends and earnings.

Dividends

Carpenter Technology pays an annual dividend of $0.72 per share and has a dividend yield of 1.4%. POSCO pays an annual dividend of $0.56 per share and has a dividend yield of 0.7%. Carpenter Technology pays out 44.4% of its earnings in the form of a dividend. POSCO pays out 8.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Institutional & Insider Ownership

95.9% of Carpenter Technology shares are owned by institutional investors. Comparatively, 5.4% of POSCO shares are owned by institutional investors. 4.5% of Carpenter Technology shares are owned by insiders. Comparatively, 0.0% of POSCO shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Carpenter Technology and POSCO’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Carpenter Technology $1.80 billion 1.37 $47.00 million $1.62 32.51
POSCO $45.65 billion 0.60 $1.22 billion $6.51 13.08

POSCO has higher revenue and earnings than Carpenter Technology. POSCO is trading at a lower price-to-earnings ratio than Carpenter Technology, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Carpenter Technology and POSCO, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Carpenter Technology 0 2 3 0 2.60
POSCO 0 2 4 0 2.67

Carpenter Technology currently has a consensus price target of $49.50, suggesting a potential downside of 6.00%. Given Carpenter Technology’s higher probable upside, analysts clearly believe Carpenter Technology is more favorable than POSCO.

Profitability

This table compares Carpenter Technology and POSCO’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Carpenter Technology 4.06% 6.67% 2.77%
POSCO 4.01% 5.03% 2.95%

Risk and Volatility

Carpenter Technology has a beta of 2.08, meaning that its stock price is 108% more volatile than the S&P 500. Comparatively, POSCO has a beta of 1.13, meaning that its stock price is 13% more volatile than the S&P 500.

Summary

Carpenter Technology beats POSCO on 9 of the 16 factors compared between the two stocks.

Carpenter Technology Company Profile

Carpenter Technology Corporation is engaged in the manufacturing, fabrication and distribution of specialty metals. The Company’s segments include Specialty Alloys Operations (SAO) and Performance Engineered Products (PEP). Its SAO segment consists of alloy and stainless steel manufacturing operations. Its PEP segment includes the Dynamet titanium business, the Carpenter Powder Products business, the Amega West business, the Specialty Steel Supply business and the Latrobe and Mexico distribution businesses. It develops, manufactures and distributes cast/wrought and powder metal stainless steels, and special alloys, including high temperature (iron-nickel-cobalt base), stainless, corrosion resistant, controlled expansion alloys, ultra-high strength and implantable alloys, tool and die steels and other specialty metals, as well as cast/wrought titanium alloys. The Company manufactures and rents down-hole drilling tools and components used in the oil and gas industry.

POSCO Company Profile

POSCO is a Korea-based company principally engaged in the manufacture and distribution of steel products. The Company operates in four segments: steel, trading, construction, and others. The steel segment includes production of steel products and sale of such products. The trading segment consists of global trading activities of POSCO Daewoo Corporation, exporting and importing a range of steel products that are both obtained from and supplied to it, as well as between other suppliers and purchasers in Korea and overseas. The construction segment includes planning, designing and construction of industrial plants, civil engineering projects, and commercial and residential buildings, both in Korea and overseas. The others segment includes power generation, liquefied natural gas (LNG) logistics, and network and system integration.

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