Can CRS's Brownfield Expansion Project Fuel Long-Term Growth?

Carpenter Technology Corporation CRS is 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.

The company is aiming to expand its capacity with a vacuum induction melting furnace, a crucial piece of equipment to manufacture high-purity specialty alloys. The brownfield capacity expansion project is designed to add 9,000 additional tons, marking a 7% rise from Carpenter Technology’s 2019 shipments.

The brownfield capacity expansion project was on schedule and budget as of the second quarter of fiscal 2026. Carpenter Technology is targeting commissioning to start in early fiscal 2028. The company expects the project to begin producing material for customers across various end-use markets immediately after commissioning, with production ramp-up continuing as it secures additional qualifications.

While CRS projects its investment in brownfield capacity expansion to boost its earnings growth, it is not expected to have any material impact on the supply-demand imbalance. 

Carpenter Technology expects construction activities related to the brownfield capacity expansion project to broaden in the second half of fiscal 2026, accelerating the company’s capital spending. The company’s projected guidance for fiscal 2026’s capital expenditure of $300-$315 million includes $175-$185 million for the brownfield capacity expansion.

Growth Strategies by Other Steel Stocks

Commercial Metals Company’s CMC Transform, Advance, Grow Program focuses on driving higher through-the-cycle margins, earnings, cash flows and ROIC. Commercial Metals expects an annualized EBITDA benefit of $150 million in fiscal 2026 from the program.
Launched in 2024, the TAG program aims to drive consistency across all areas of the business for Commercial Metals. The program is designed to optimize logistics, reduce input consumption, lower costs and boost energy efficiency.

Cleveland-Cliffs Inc. CLF is executing significant cost-reduction initiatives, with a goal of lowering steel unit costs by $150 per ton in three years. The company reduced overhead and fixed costs, along with optimizing its integrated footprint and improving efficiencies. Cleveland-Cliffs expects further cost reduction in 2026. Cleveland-Cliffs expects to gain from Stelco’s low-cost structure and asset optimization.

CRS’s Price Performance, Valuations & Estimates

CRS shares have surged 95.4% over the past year compared with the industry’s growth of 98.1%. In comparison, the Zacks Basic Materials sector and the S&P 500 have returned 52.8% and 19.7%, respectively.

Carpenter Technology is currently trading at a forward price/sales ratio of 5.96 compared with the industry's 2.07.

The Zacks Consensus Estimate for fiscal 2026 sales is pegged at $3.07 billion, indicating a 6.6% year-over-year jump. The consensus mark for the year’s earnings is pegged at $10.28 per share, indicating a year-over-year rise of 37.4%.

The Zacks Consensus Estimate for fiscal 2027 sales implies 9.4% year-over-year growth and the same for earnings suggests a rise of 17.9%.

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

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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This article originally published on Zacks Investment Research (zacks.com).

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