When Precision Castparts (NYSE:PCP) releases its second quarter earnings on Thursday, October 25, 2012, it is expected to report earnings that are up 15.8% from a year ago. The consensus estimate is $2.35 per share, up from earnings of $2.03 per share a year ago.
Investors should care about a company's quarterly earnings because it shows the state of the business over the past 90 days and provides guidance for the following 90 days. SEE: 12 Things You Need To Know About Financial Statements
What to Expect: The consensus estimate is down from $2.43 three months ago, but it hasn't changed in the last month. For the fiscal year, analysts are projecting earnings of $10.06 per share.
Precision Castparts is expected to report revenue of $2.02 billion for the quarter, beating last year's figure of $1.79 billion by 12.9%. Precision Castparts is expected to report revenue of $8.45 billion for the fiscal year.
Company Performance: Revenue has been growing for three consecutive quarters now. It rose 17.6% to $1.97 billion in first quarter. Prior to that, the figure rose 15.4% in the fourth quarter of the last fiscal year and 14.2% in the third quarter of the last fiscal year.
PCP has a P/E ratio of 18.9, high compared to the industry average of 17.19. A company with a high P/E ratio will eventually have to live up to the high rating by substantially increasing its earnings, or the price will need to drop. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. To determine the P/E ratio, an investor divides the market price of the stock by the earnings-per-share (EPS) of the stock. SEE: The P/E Ratio: A Good Market-Timing Indicator
The stock price has risen from $160.93 on July 24, 2012 to $165.68 over the past quarter. The biggest recent change for Precision Castparts' stock price came on September 6, 2012, when it rose $5.42 per share to $163.82.
The Competition: Precision Castparts manufactures complex metal components and products and provides investment castings, forgings, and fastener systems for aerospace and industrial gas turbine applications. The company's closest competitor in the misc. fabricated products industry, Allegheny Technologies (ATI), will report earnings on October 24, 2012. Analysts are expecting earnings of 39 cents per share for Allegheny Technologies, down 38.1% from last year's earnings of 63 cents per share. Analysts are more optimistic about Precision Castparts than about Allegheny Technologies. Only eight out of nine analysts rate the latter a buy compared to 11 of 18 for the former.