Can Carpenter Technology Sustain Its Strong Cash Flow Growth in FY27?

Carpenter Technology Corporation CRS generated $605 million in cash from operating activities and $362.3 million in adjusted free cash flow in fiscal 2026, marking year-over-year increases of 37.4% and 26%, respectively. The upside was driven by higher earnings and focus on working capital management while increasing productivity.

The company’s financial position remains strong, which gives it the strategic flexibility to strengthen its long-term growth profile by investing in emerging technologies like additive manufacturing and soft magnetics while also providing direct returns to shareholders through quarterly dividends. At the end of fiscal 2026, liquidity was $892.4 million, including $393.3 million in cash and $499.1 million in available borrowings.Net debt to EBITDA was negative 0.3X with no near-term debt maturities.

The company is maintaining its strong balance sheet while investing in a $400-million brownfield expansion project based in Athens. The project is aimed at adding high-purity primary and secondary melt capacity to the company’s existing downstream finishing assets, which will boost long-term growth.

Backed by record profitability and favorable demand trends, CRS expects fiscal 2027 operating income of $850-$880 million, indicating growth of 21-25% from fiscal 2026. The company expects the gains to be driven by higher volumes, productivity improvements, product-mix optimization and pricing actions.

For fiscal 2027, the company expects $400-$430 million in adjusted free cash flow while capital expenditure rises to $355-$375 million, supporting its balanced approach to growth investment and shareholder returns.

Balance Sheet Performance of Other Steel Stocks

Commercial Metals Company’s CMC cash generated from operating activities for the nine months ended May 31, 2026, was $603 million compared with $400 million in the year-ago period. As of May 31, 2026, cash, cash equivalents and restricted cash totaled $0.56 billion compared with $1 billion at the end of fiscal 2025. 

Backed by its focus on transformation, Commercial Metals expects to generate structurally higher margins and enhanced free cash flow. Commercial Metals expects to generate a free cash flow of $1.375-$1.525 billion in fiscal 2029.

Nucor Corporation’s NUE cash and cash equivalents were $2.48 billion at the end of the quarter, up from $1.95 billion a year earlier. Including short-term investments, Nucor had $2.69 billion in liquidity on hand. Demand in non-residential construction markets was healthy in 2025 and the momentum is expected to continue this year, driving Nucor’s earnings and cash flows.

CRS’s Price Performance, Valuations & Estimates

Carpenter Technology’s shares have surged 98.2% over the past year compared with the industry’s growth of 79.7%. In comparison, the Zacks Basic Materials sector and the S&P 500 have returned 34.6% and 22.9%, respectively.
 

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Carpenter Technology is currently trading at a forward price/sales ratio of 6.85X compared with the industry's 2.62X.

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The Zacks Consensus Estimate for fiscal 2027 sales is pegged at $3.40 billion, indicating an 8.8% year-over-year jump. The consensus mark for the year’s earnings is pegged at $13.09 per share, suggesting a year-over-year rise of 21.6%.

The Zacks Consensus Estimate for fiscal 2027 sales implies 8.4% year-over-year growth, and the same for earnings suggests a rise of 19.6%.

EPS estimates for fiscal 2026 and 2027 have moved north over the past 60 days.

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CRS currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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