Breaking News

Here's Why It Is Worth Holding On To Crane (CR) Stock Now

By Zacks Investment ResearchJun 04, 2019 09:40PM ET
Here's Why It Is Worth Holding On To Crane (CR) Stock Now
By Zacks Investment Research   |  Jun 04, 2019 09:40PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

We issued an updated research report on Crane Co. (NYSE:CR) on Jun 4. While the conglomerate is well placed to reap benefits of its initiatives and buyout activities, top-line challenges and cost-related issues might be concerning.

Below we discuss why it will be prudent for investors to hold this stock for now.

Factors Favoring Crane

Sound Financial Performance, Impressive Outlook: The company has a sound earnings surprise history, having beaten estimates in 14 quarters in a row. In the last reported results (for the first quarter of 2019), the company witnessed earnings beat of 4.32% while sales surprise was a positive 5%. Considering the last four quarters, its average earnings surprise was positive 6.74%.

In the quarters ahead, the company anticipates gaining from its focus on product development, growth investments, acquired assets and repositioning initiatives. Adjusted earnings in 2019 are predicted to be $6.25-$6.45 per share, reflecting year-over-year growth of 6% (at the mid-point).

Repositioning Activities: These initiatives started in the fourth quarter of 2017 for Payment & Merchandising, Fluid Handling, and Aerospace & Electronics segments. The aim was to improve profitability, better serve customers through facility consolidations (mainly in North America and Europe) and 3% reduction in the global workforce. These repositioning initiatives are predicted to add 35 cents per share to the company’s earnings by 2020.

Crane is progressing well with these repositioning activities.

Capital Allocation: The company effectively uses capital for making acquisitions, growth investments and rewarding shareholders handsomely. Crane Currency has been one of the most important buyouts for Crane. Since acquired in January 2018, Crane Currency has been strengthening Crane’s Payment & Merchandising Technologies segment. During 2018 till 2021, the Crane Currency buyout is predicted to strengthen earnings by $1.00 per share.

The company rewards its shareholders through dividend payments and share buybacks. In 2018, it used approximately $83.5 million for paying dividends, reflecting 6.5% growth over the previous year, and repurchased shares worth $50.1 million. Further, the company paid dividends of $20.9 million in the first quarter of 2019. Quarterly dividend rate was hiked by 11% in January 2019.

Factors Working Against Crane

Top-Line Woes: The company’s top line in the first quarter of 2019 suffered from 14.5% decline in the Engineered Materials segment’s sales. The poor segmental performance was caused by weakness in the recreational vehicle end market. For 2019, the company’s revenues are predicted to be $3,296 million, reflecting 2% decline from 2018. Core sales are likely to be between 2% fall and 1% growth in the year.

Organic sales for the Payment & Merchandising Technologies segment are estimated to decline 7% and that for Engineered Materials are likely to remain flat year over year.

High Costs and Expenses: These have been bothering Crane for quite some time now. The company’s cost of sales increased 2.5% (CAGR) in the last five years (2014-2018) while operating expenses grew 0.4%. In the first quarter of 2019, an increase of 1.3% and 7% were recorded in costs of sales and operating expenses, respectively.

For 2019, Crane predicts corporate expenses to be roughly $65 million. Integration costs related to acquired assets are likely to be roughly 7 cents per share and repositioning costs are predicted to be 13 cents.

Forex Woes: Geographical diversification, with presence in North and South America, Europe, the Middle East, Asia and Australia, is reflective of a flourishing business of the company. However, this diversity exposed it to headwinds arising from geopolitical issues and unfavorable movements in foreign currencies. In the first quarter of 2019, forex woes adversely impacted sales growth by 3%.

The company predicts forex woes to adversely impact top-line results by 1.5% in 2019.

Stocks Within Industry

Three high-value stocks within the industry in which Crane belongs are General Electric Company (NYSE:GE) , Honeywell International Inc. (NYSE:HON) and United Technologies Corporation (NYSE:UTX) .

Wall Street’s Next Amazon (NASDAQ:AMZN)

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.

Click for details >>

Honeywell International Inc. (HON): Free Stock Analysis Report

General Electric Company (GE): Free Stock Analysis Report

United Technologies Corporation (UTX): Free Stock Analysis Report

Crane Company (CR): Free Stock Analysis Report

Original post

Zacks Investment Research
Here's Why It Is Worth Holding On To Crane (CR) Stock Now
Here's Why It Is Worth Holding On To Crane (CR) Stock Now

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email