A month has gone by since the last earnings report for Crane (CR Quick QuoteCR - Free Report) . Shares have added about 4.9% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Crane due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Crane Q2 Earnings and Revenues Beat Estimates, Up Y/Y

Crane delivered impressive second-quarter 2021 results. Its earnings surpassed the Zacks Consensus Estimate by 31.65%, whereas sales exceeded the same by 8.14%.

Adjusted earnings in the reported quarter were $1.83 per share, surpassing the Zacks Consensus Estimate of $1.39. The bottom line expanded 185.9% from the year-ago quarter figure of 64 cents on the back of sales growth and improved margin.

Revenues Details

In the quarter under review, Crane’s net sales were $796.4 million, reflecting growth of 23.6% from the year-ago quarter. Results benefited from core sales growth of 19% and contribution of 5% from movements in foreign currencies.

Also, Crane’s net sales surpassed the Zacks Consensus Estimate of $736 million.

The company reports net sales under three segments — Process Flow Technologies, Payment & Merchandising Technologies and Aerospace & Electronics. In May 2021, it entered into a deal to divest its Engineered Materials segment. Effective second-quarter 2021, it represents the Engineered Materials segment as discontinued operations. The segmental information is briefly discussed below:

Revenues from Process Flow Technologies were $310.7 million, reflecting growth of 30% from the year-ago quarter. The results benefited from a 22% gain from organic sales and 8% from movements in foreign currencies. The segment’s order backlog was $344.1 million in the reported quarter, reflecting sequential growth of 5.7%.

Revenues from Payment & Merchandising Technologies totaled $328.2 million, increasing 32.6% year over year. Organic sales in the quarter grew 27%, while foreign currency translation had a positive impact of 5%. Order backlog at the end of the reported quarter was $374.7 million, up 11.2% sequentially.

Revenues from the Aerospace & Electronics segment were $157.5 million, relatively flat year over year. Order backlog at the end of the quarter under review was $472.9 million, down 1.8% sequentially.

Margin Profile

In the second quarter, Crane’s cost of sales of $476.8 million represented a 12.2% increase from the year-ago quarter. It represented 59.9% of net sales compared with 66% in the year-ago quarter. Selling, general and administrative expenses decreased 4.1% to $182.7 million. It represented 22.9% of net sales versus 29.6% in the year-ago quarter.

Adjusted operating income in the second quarter increased 140.8% year over year to $139.9 million. Adjusted operating margin grew 860 basis points to 17.6%. Interest expenses, net, in the reported quarter were $11.4 million, down 20.8% year over year.

Balance Sheet and Cash Flow

Exiting the second quarter, Crane had cash and cash equivalents of $386.7 million, down 33.1% from $578.4 million at the end of the last reported quarter. Long-term debt balance was relatively flat sequentially at $843.4 million.

In the reported quarter, the company did not make any repayment of commercial paper (maturity >90 days).

In the first half of 2021, it generated net cash of $197.5 million from operating activities compared with $75.6 million in the year-ago period. Capital expenditure was $13.9 million, up 4.5% year over year.

Free cash flow in the reported quarter was $140.7 million compared with $102.4 million in the year-ago quarter.

Shareholder-Friendly Policy

In the second quarter, Crane used $25.2 million for paying dividends, increasing 1.2% from the year-ago quarter. No shares were repurchased in the reported quarter.

Outlook

Based on the second quarter’s impressive results and strengthening end-market business, Crane increased its projections for 2021.

It now anticipates adjusted earnings per share of $5.95-$6.15 for the year, higher than $5.65-$5.85 mentioned previously.

Sales are predicted to be $3,100 million compared with the previously stated $3,015 million. Acquired assets will likely benefit sales by $5 million (guidance maintained), whereas movements in foreign currencies are expected to boost sales by 3.5% versus 2.5% stated previously. Core sales are expected to increase 7-9% year over year, marking an increase from 5-7% stated earlier.

Corporate expenses for the year are expected to be $80 million, up from $77 million mentioned earlier. Adjusted tax rate will likely be 20.5% versus 21% estimated earlier. The company anticipates operating cash flow of $390-$420 million and capital expenditure of $70 million for 2021. Free cash flow is projected to be $320-$350 million.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

At this time, Crane has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Crane has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.