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Crane (CR) Beats Q1 Earnings & Revenues, Raises '17 View

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Crane Co. (CR - Free Report) kept its earnings streak alive, reporting better-than-expected results for first-quarter 2017. The company’s earnings of $1.05 per share, surpassed the Zacks Consensus Estimate of $1.00 by 5%. Also, the bottom line increased roughly 13% over the year-ago tally of 93 cents.

 

The company’s revenues totaled $673.4 million, 3.2% higher than the Zacks Consensus Estimate of $652.5 million and up 2% year over year. The company’s core sales grew 4%, offset by 2% adverse impact from unfavorable foreign currency movements and certain adverse impacts from divestitures.

At the quarter end, total order backlog was $705.8 million, down 7% year over year.

Segmental Revenues

Crane generates revenues under four heads, results of which are briefly discussed below.

Revenues from Aerospace & Electronics totaled $163.4 million, down 5% year over year. Order backlog was $352.4 million, down 15.8%.

Payment & Merchandising Technologies generated revenues of $195.5 million, up 14% year over year. Order backlog was $85.8 million, up 42.1%.

Engineered Materials’ revenues were $74.9 million, up 10% year over year. Order backlog for the segment increased 11.3% to $17.8 million.

Revenues from Fluid Handling decreased 3% year over year to $239.6 million. Order backlog was $249.8 million, down 5.2%.

Margins

In the quarter, Crane’s cost of goods sold inched up 0.8% year over year and as a percentage of revenues came in at 63.8%, below 64.6% in the prior-year quarter. Gross margin grew 80 basis points (bps) to 36.2%. Selling, general and administrative expenses, as a percentage of revenues were 21.9% compared with 22.5% in the year-ago quarter.

Operating margin, before special items, increased 130 bps year over year to 14.3%.

Balance Sheet and Cash Flow

Exiting the first quarter, Crane had cash and cash equivalents of $504.8 million, slightly below $509.7 million at previous-quarter end. Long-term debt was roughly flat sequentially at $745.5 million.

In the quarter, the company’s net cash generated from operating activities totaled $3.5 million versus $18 million used in the year-ago quarter. Capital spending fell 12.7% to $9.6 million. Dividend paid in the quarter was approximately $19.6 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 for second-quarter 2017. The dividend will be paid on Jun 9, to shareholders on record as of May 31.

Outlook

For 2017, Crane increased the lower-end of its previously issued earnings guidance of $4.30−$4.55 per share by 5 cents to $4.35−$4.55.

Cash flow from operating activities is anticipated to be within $325−$355 million while capital spending is likely to total $50 million.

Crane Company Price and Consensus

 

Crane Company Price and Consensus | Crane Company Quote

Zacks Rank & Key Picks

With a market capitalization of $4.6 billion, Crane currently carries a Zacks Rank #2 (Buy). Other stocks worth considering in the diversified operations industry include Leucadia National Corporation , 3M Company (MMM - Free Report) and Carlisle Companies Incorporated (CSL - Free Report) . While Leucadia National sports a Zacks Rank #1 (Strong Buy), both 3M Company and Carlisle Companies carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Leucadia National Corporation’s earnings estimates for 2017 were revised upward over the last 60 days.

3M Company performed well in the last four quarters, with an average positive earnings surprise of 1.94%. Also, earnings estimates for 2017 and 2018 improved in the last 60 days.

Carlisle Companies Incorporated delivered an average positive earnings surprise of 11.08% in the trailing four quarters. Also, its earnings estimates for 2017 and 2018 improved in the last 60 days.  

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