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Crane Co. (CR - Free Report) reported better-than-expected results for third-quarter 2016, with an earnings beat of 5.9%. Earnings, before special items, came in at $1.07 per share, above the Zacks Consensus Estimate of $1.01 and the year-ago tally of $1.03.
Net sales generated in the quarter were $694.2 million, above the Zacks Consensus Estimate of $658.5 million. Also, Crane's top line grew 3.6% year over year on the back of core sales growth of 5.5%, partially offset by 2% adverse impact from unfavorable foreign currency movements.
At the quarter end, Crane's total order backlog was $696.5 million, down 13.8% year over year.
Crane generates revenues under four heads, results of which are briefly discussed below.
Revenues from Aerospace & Electronics totaled $198.2 million, up 15.4% year over year. Order backlog was $377.1 million, down 13.5% sequentially.
Payment & Merchandising Technologies generated revenues of $186.7 million, up 9.4% year over year. Order backlog was $65.6 million, down 0.3% sequentially.
Engineered Materials’ revenues were $64.2 million, up 2.1% year over year. Order backlog for the segment decreased 20.1% sequentially to $12.3 million.
Revenues from Fluid Handling decreased 7.4% year over year to $245.1 million. Order backlog was $241.6 million, down 1.9% sequentially.
Margins
In the quarter, Crane’s cost of goods sold increased 4.2% year over year, and as a percentage of revenues came in at 64.7%, slightly above 64.4% in the prior-year quarter. Gross margin inched down 30 basis points (bps) to 35.3%. Selling, general and administrative expenses, as a percentage of revenues were 20.3% down from 21.1% in the year-ago quarter.
Operating margin, before special items, increased 50 bps year over year to 15.0%.
Balance Sheet and Cash Flow
Exiting the third quarter, Crane’s cash and cash equivalents were $436.3 million, up from $408.9 million in the previous quarter. Long-term debt was roughly flat sequentially at $745 million.
In the quarter, Crane generated cash of $116.6 million from its operating activities, above $69.7 million generated in the year-ago quarter. Capital expenditure grew 46.9% year over year to $11.9 million. Dividend paid in the quarter was approximately $19.3 million.
Concurrent with the earnings release, Crane announced that its board of directors has approved the payment of a quarterly dividend of 33 cents per share. The dividend will be paid on Dec 9, 2016 to shareholders of record as on Nov 30.
Outlook
For 2016, Crane now predicts non-GAAP earnings to be $4.12−$4.20 per share versus $4.00−$4.20 expected earlier. Sales are still expected to be $2.7 billion, with core sales growth to be 0−2% versus the earlier forecast of (1.5%)−1.5% year over year.
Free cash flow is anticipated within $200−$225 million versus $195−$220 million expected earlier.
With a market capitalization of $3.5 billion, Crane currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry include Mitsubishi Corporation , Danaher Corporation (DHR - Free Report) and Leucadia National Corporation . While Mitsubishi Corporation sports a Zacks Rank #1 (Strong Buy), both Danaher Corporation and Leucadia National carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Mitsubishi Corporation’s earnings estimates for fiscal 2017 and fiscal 2018 have been revised upward over the last 60 days.
Danaher Corporation reported better-than-expected results in the last four quarters, with a positive average earnings surprise of 6.09%. Also, earnings estimates for 2016 and 2017 have increased over the last 60 days. In addition, earnings estimates for Leucadia National Corporation have improved for 2016.
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Crane (CR) Beats Q3 Earnings & Revenues; Revises '16 View
Crane Co. (CR - Free Report) reported better-than-expected results for third-quarter 2016, with an earnings beat of 5.9%. Earnings, before special items, came in at $1.07 per share, above the Zacks Consensus Estimate of $1.01 and the year-ago tally of $1.03.
Net sales generated in the quarter were $694.2 million, above the Zacks Consensus Estimate of $658.5 million. Also, Crane's top line grew 3.6% year over year on the back of core sales growth of 5.5%, partially offset by 2% adverse impact from unfavorable foreign currency movements.
At the quarter end, Crane's total order backlog was $696.5 million, down 13.8% year over year.
Segmental Details
Crane generates revenues under four heads, results of which are briefly discussed below.
Revenues from Aerospace & Electronics totaled $198.2 million, up 15.4% year over year. Order backlog was $377.1 million, down 13.5% sequentially.
Payment & Merchandising Technologies generated revenues of $186.7 million, up 9.4% year over year. Order backlog was $65.6 million, down 0.3% sequentially.
Engineered Materials’ revenues were $64.2 million, up 2.1% year over year. Order backlog for the segment decreased 20.1% sequentially to $12.3 million.
Revenues from Fluid Handling decreased 7.4% year over year to $245.1 million. Order backlog was $241.6 million, down 1.9% sequentially.
Margins
In the quarter, Crane’s cost of goods sold increased 4.2% year over year, and as a percentage of revenues came in at 64.7%, slightly above 64.4% in the prior-year quarter. Gross margin inched down 30 basis points (bps) to 35.3%. Selling, general and administrative expenses, as a percentage of revenues were 20.3% down from 21.1% in the year-ago quarter.
Operating margin, before special items, increased 50 bps year over year to 15.0%.
Balance Sheet and Cash Flow
Exiting the third quarter, Crane’s cash and cash equivalents were $436.3 million, up from $408.9 million in the previous quarter. Long-term debt was roughly flat sequentially at $745 million.
In the quarter, Crane generated cash of $116.6 million from its operating activities, above $69.7 million generated in the year-ago quarter. Capital expenditure grew 46.9% year over year to $11.9 million. Dividend paid in the quarter was approximately $19.3 million.
Concurrent with the earnings release, Crane announced that its board of directors has approved the payment of a quarterly dividend of 33 cents per share. The dividend will be paid on Dec 9, 2016 to shareholders of record as on Nov 30.
Outlook
For 2016, Crane now predicts non-GAAP earnings to be $4.12−$4.20 per share versus $4.00−$4.20 expected earlier. Sales are still expected to be $2.7 billion, with core sales growth to be 0−2% versus the earlier forecast of (1.5%)−1.5% year over year.
Free cash flow is anticipated within $200−$225 million versus $195−$220 million expected earlier.
CRANE CO Price, Consensus and EPS Surprise
CRANE CO Price, Consensus and EPS Surprise | CRANE CO Quote
Zacks Rank & Stocks to Consider
With a market capitalization of $3.5 billion, Crane currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry include Mitsubishi Corporation , Danaher Corporation (DHR - Free Report) and Leucadia National Corporation . While Mitsubishi Corporation sports a Zacks Rank #1 (Strong Buy), both Danaher Corporation and Leucadia National carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Mitsubishi Corporation’s earnings estimates for fiscal 2017 and fiscal 2018 have been revised upward over the last 60 days.
Danaher Corporation reported better-than-expected results in the last four quarters, with a positive average earnings surprise of 6.09%. Also, earnings estimates for 2016 and 2017 have increased over the last 60 days. In addition, earnings estimates for Leucadia National Corporation have improved for 2016.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>