6/15/2010
NEWS BRIEFS
Which Fastener Company Generates “Eye-Popping” Returns For Investors?
MEDIA SPOTLIGHT
Editor’s Note: Articles in Media Spotlight are excerpts from publications or broadcasts that show the industry what the public is reading or hearing about fasteners and fastener companies.
Precision Castparts Corp., an “old-line manufacturer whose core technology literally dates back to the Bronze Age,” is getting noticed for generating strong returns for investors.
“If you had had the foresight to buy 100 shares of Precision at the beginning of 2000, they would have cost you $2,625,” the Seattle Times reports. “Had you held onto the shares (through two 2-for-1 splits) and reinvested the dividends, you’d have had $44,218 by the end of 2009 – an eye-popping 33.4 percent average annual return.”
PCC makes complex metal parts using forging and casting, processes that “would in their essentials have been familiar to an ancient blacksmith.”
Precision Castparts has forged a powerhouse fastener division that includes Cherry Aerospace, Air Industries and Shur-Lok. Precision Castparts assembled its fastener division by acquiring SPS Technologies in 2003 for $893 million and airframe fastener maker AIC in early 2005 for $194 million.
PCC also manufactures thread rolling dies and header tooling for fastener machinery.
But analysts say that’s as far as PCC will stray from its core business.
Such complicated parts need to be held together, so in 2003 Precision bought a maker of highly engineered metal fasteners. It’s since grown that into a third major business unit, serving mainly aerospace customers. The company also sells high-performance, nickel-based alloys designed to hold up under extreme conditions.
That’s about as far as Precision is likely to get from its core business, said J.B. Groh, who follows the company for D.A. Davidson in suburban Portland.
“They’ve really stuck with the things they’re good at, and they’re very, very good at complex metal parts that other people can’t do,” stated J.B. Groh of D.A. Davidson. “Relentless pursuit of operational improvement – that’s really what sets them apart.”
Like other companies, PCC endured challenging economic conditions in 2009, when overall sales at PCC dropped 19.3% to $5.5 billion, with net income declining to $924.3 million. But when viewed over the past decade, the company has grown its sales from $1.7 billion in fiscal 2000 to $5.5 billion in fiscal 2010, while profit has risen from $85.3 million to $922.6 million.
And now that the aerospace industry has begun to pick up (each Boeing 787 Dreamliner contains $5.6 million of PCC components), analysts expect good things from PCC in the coming months. ©2010 GlobalFastenerNews.com
Related Stories:
• Stock Report: PRECISION CASTPARTS
• Top Ten Fastener Deals of 2009
Related Links:
Share: