Company Reports

Narrow-moat-rated Crane delivered strong second-quarter results, featuring an 18% year-over-year increase in adjusted EPS, from $1.10 to $1.30. We've raised our fair value estimate to $130 per share from $120, which reflects our slightly more optimistic core revenue growth and operating margin assumptions as well as the time value of money.

Following the separation of the payment and merchandising technologies business as Crane NXT in April 2023, Crane’s portfolio consists of the aerospace and electronics, process flow technologies, and engineered materials segments. We think Crane owns a portfolio of moaty businesses that tend to be leaders in their niche markets, typically holding the number-one or number-two market share position. Crane manufactures highly engineered products that often perform a mission-critical function. Roughly 40% of its sales come from the aftermarket.

Following the separation of the payment and merchandising technologies business as Crane NXT in April 2023, Crane’s portfolio consists of the aerospace and electronics, process flow technologies, and engineered materials segments. We think Crane owns a portfolio of moaty businesses that tend to be leaders in their niche markets, typically holding the number-one or number-two market share position. Crane manufactures highly engineered products that often perform a mission-critical function. Roughly 40% of its sales come from the aftermarket.

After reviewing Crane’s May 14 investor day presentation, we reiterate our narrow moat rating and raise our fair value estimate to $120 from $110. Our more optimistic midcycle profitability assumptions drive our fair value estimate increase.

We’re raising our fair value estimate for narrow-moat-rated Crane to $110 per share from $100 after the company reported strong first-quarter results. We were encouraged to see Crane’s first-quarter core orders and core backlog both increase by 11% from the same period last year. Management raised its outlook for 2024 and now anticipates core sales growth of 4%-6% (up from 3%-5%) and adjusted earnings per share of $4.75-$5.05 (up from $4.55-$4.85). Our fair value estimate increase reflects our more optimistic 2024 revenue growth and operating margin assumptions as well as the time value of money.

Following the separation of the payment and merchandising technologies business as Crane NXT in April 2023, Crane’s portfolio consists of the aerospace and electronics, process flow technologies, and engineered materials segments. We think Crane owns a portfolio of moaty businesses that tend to be leaders in their niche markets, typically holding the number-one or number-two market share position. Crane manufactures highly engineered products that often perform a mission-critical function. Roughly 40% of its sales come from the aftermarket.

Narrow-moat-rated Crane finished 2023 on a strong note, as its full-year sales of $2.09 billion and adjusted EPS of $4.29 both came in above our expectations of $2.08 billion and $4.20, respectively. After rolling our model forward one year, we've raised our fair value estimate to $100 from $92, driven by our slightly more optimistic midcycle operating margin expectations as well as time value of money.

Following the separation of the payment and merchandising technologies business as Crane NXT in April 2023, Crane’s portfolio consists of the aerospace and electronics, process flow technologies, and engineered materials segments. We think Crane owns a portfolio of moaty businesses that tend to be leaders in their niche markets, typically holding the number-one or number-two market share position. Crane manufactures highly engineered products that often perform a mission-critical function. Roughly 40% of its sales come from the aftermarket.

We are raising our fair value estimate for narrow-moat-rated Crane to $92 per share from $87 after the company reported strong third-quarter results. Management increased its full-year guidance for the third time this year and now anticipates 2023 core sales growth of 6%-8% (up from 5%-7%) and adjusted EPS of $4.05-$4.20 (up from $3.80-$4.10). The fair value estimate adjustment reflects our slightly higher near-term revenue growth and operating margin projections.

Following the separation of the payment and merchandising technologies business as Crane NXT in April 2023, Crane’s portfolio consists of the aerospace and electronics, process flow technologies, and engineered materials segments. We think Crane owns a portfolio of moaty businesses that tend to be leaders in their niche markets, typically holding the number-one or -two market share position. Crane manufactures highly engineered products that often perform a mission-critical function. Roughly 40% of its sales come from the aftermarket.

Following the separation of the payment and merchandising technologies business as Crane NXT in April 2023, Crane’s portfolio consists of the aerospace & electronics, process flow technologies, and engineered materials segments. We think that Crane owns a portfolio of moaty businesses that tend to be leaders in their niche markets, typically holding the number-one or -two market share position. Crane manufactures highly engineered products that often perform a mission-critical function, and roughly 40% of the firm’s sales come from the aftermarket.

Narrow-moat-rated Crane posted solid second-quarter results, featuring a 30% year-over-year increase in adjusted operating profit from continuing operations, and raised its full-year outlook for the second time this year. The company delivered a 430-basis-point year-over-year adjusted operating margin expansion in the second quarter, from 12.2% to 16.5%. We've increased our fair value estimate to $87 from $85, which reflects our slightly more optimistic near-term revenue growth assumptions as well as time value of money.

We’ve increased our fair value estimate for narrow-moat Crane to $85 from $83 after the company reported strong first-quarter results, featuring a 27% year-over-year increase in adjusted operating profit. The fair value adjustment reflects our slightly more optimistic revenue growth and operating margin projections as well as time value of money. We view the stock as modestly undervalued, with shares currently trading in 4-star territory.

Following the separation of the payment and merchandising technologies business as Crane NXT in April 2023, Crane’s portfolio consists of the aerospace & electronics, process flow technologies, and engineered materials segments. We think that Crane owns a portfolio of moaty businesses that tend to be leaders in their niche markets, typically holding the number-one or -two market share position. Crane manufactures highly engineered products that often perform a mission-critical function, and roughly 40% of the firm’s sales come from the aftermarket.

We launch coverage of Crane, following its separation from Crane NXT, with a narrow moat rating and an $83 fair value estimate.

Following the separation of the payment and merchandising technologies business as Crane NXT in April 2023, Crane’s portfolio consists of the aerospace & electronics, process flow technologies, and engineered materials segments. We think that Crane owns a portfolio of moaty businesses that tend to be leaders in their niche markets, typically holding the number-one or -two market share position. Crane manufactures highly engineered products that often perform a mission-critical function, and roughly 40% of the firm’s sales come from the aftermarket.

We are dropping coverage of Crane Holdings. The coverage drop is related to the separation of the payment and merchandising technologies segment as Crane NXT. We expect to initiate coverage of Crane Co. (which will hold the aerospace and electronics, process flow technologies, and engineered materials segments) in early April.

We are placing our fair value estimate for Crane Holdings under review ahead of the company's April 3 separation transaction.

We are raising our fair value estimate for narrow-moat-rated Crane to $130 from $126 following the firm’s investor day on March 9. Our fair value increase reflects our slightly more optimistic long-term revenue growth and operating margin assumptions as well as time value of money.

Crane owns a portfolio of moaty businesses that tend to be leaders in their niche markets, typically holding the number-one or -two market share position. It makes a wide range of products, including valves, banknote validators, and aerospace components, but a common thread across its portfolio is that Crane manufactures highly engineered products that often perform a mission-critical function. Crane has consistently generated solid returns on invested capital, averaging around 14% over the past 10 years, and we think that the company is well positioned to continue outearning its cost of capital thanks to its narrow moat.