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Crane Company (CR) Down 7.7% Since Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Crane Company (CR - Free Report) . Shares have lost about 7.7% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is CR due for a breakout? 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 drivers.
Crane's Q1 Earnings Beat, Revenues Miss, '18 View Up
Crane kept its earnings steak alive in the first quarter of 2018, reporting better-than-expected results. Adjusted earnings for the quarter came in at $1.31 per share, surpassing the Zacks Consensus Estimate of $1.27. Also, the bottom line increased 24.8% from the year-ago tally of $1.05.
The company’s revenues totaled a record $799.1 million, up 18.7% year over year. However, the reported figure missed the Zacks Consensus Estimate of $805 million. The improvement in the metric was driven by a 15% benefit from acquired assets and a 4% gain from favorable foreign currency movements, partially offset by 1% decline in core sales.
At the quarter end, total order backlog was $976.8 million, up an impressive 38.4% year over year.
Segmental Details
Crane generates revenues from its four segments, which are briefly discussed below.
Revenues from Aerospace & Electronics segment totaled $170.4 million, up 4.3% year over year. It represented 21.3% of first-quarter revenues. Order backlog was $381.2 million, up 8.2% year over year.
Payment & Merchandising Technologies segment generated revenues of $292.4 million, up 49% year over year. It represented 36.5% of first-quarter revenues. Order backlog was $301 million (including backlog related to the acquired Crane Currency business and Microtronic business) compared with $85.8 million in the prior-year quarter.
Engineered Materials segment’s revenues were $69.7 million, down 6.7% year over year. It represented 8.8% of first-quarter revenues. Order backlog at the segment decreased 24.7% year over year to $13.4 million.
Revenues from Fluid Handling increased 11.3% year over year to $266.6 million. It represented 33.4% of first-quarter revenues. Order backlog was $281.2 million, up 12.6% year over year.
Costs & Margins
In the reported quarter, Crane’s cost of goods sold increased 21.4% year over year. The same metric, as a percentage of revenues, came in at 65.2% compared with 63.8% in the prior-year quarter. Selling, general and administrative expenses, as a percentage of revenues, were 22.2% compared with 21.9% in the year-ago quarter.
Operating margin, before special items, expanded 80 bps year over year to 12.1%. Operating margin was 10.5%, up 30 bps from the year-ago quarter.
Balance Sheet and Cash Flow
As of Mar 31, 2018, Crane’s cash and cash equivalents were $642.3 million than $504.8 million in the year-ago quarter. Long-term debt increased to $1,138.5 million from $494.1 million as of Dec 31, 2017.
In the quarter, the company’s net cash generated from operating activities totaled $74.2 million compared with $3.5 million in the year-ago quarter. Free cash flow was $46.7 million in the same period. Dividend paid in the quarter was approximately $20.9 million.
Concurrent with the earnings release, Crane announced that its board of directors has approved the payment of a quarterly dividend of 35 cents to shareholders for second-quarter 2018. The dividend will be paid on Jun 8, 2018.
Outlook
For 2018, Crane anticipates earnings, excluding special items, to be within the $5.45-$5.65 per share range compared with $5.35-$5.55 guided earlier. GAAP earnings are envisioned to be in the band of $4.75-$4.95 than the earlier projected range of $4.65-$4.85 per share.
Free cash flow is projected to lie within the $240-$270 million range compared with 220-$250 million anticipated earlier.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to four lower. In the past month, the consensus estimate has shifted downward by 5.7% due to these changes.
At this time, CR has a nice Growth Score of B, though it is lagging a bit on the momentum front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Based on our scores, the stock is more suitable for growth investors than those looking for value and momentum.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, CR has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Crane Company (CR) Down 7.7% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Crane Company (CR - Free Report) . Shares have lost about 7.7% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is CR due for a breakout? 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 drivers.
Crane's Q1 Earnings Beat, Revenues Miss, '18 View Up
Crane kept its earnings steak alive in the first quarter of 2018, reporting better-than-expected results. Adjusted earnings for the quarter came in at $1.31 per share, surpassing the Zacks Consensus Estimate of $1.27. Also, the bottom line increased 24.8% from the year-ago tally of $1.05.
The company’s revenues totaled a record $799.1 million, up 18.7% year over year. However, the reported figure missed the Zacks Consensus Estimate of $805 million. The improvement in the metric was driven by a 15% benefit from acquired assets and a 4% gain from favorable foreign currency movements, partially offset by 1% decline in core sales.
At the quarter end, total order backlog was $976.8 million, up an impressive 38.4% year over year.
Segmental Details
Crane generates revenues from its four segments, which are briefly discussed below.
Revenues from Aerospace & Electronics segment totaled $170.4 million, up 4.3% year over year. It represented 21.3% of first-quarter revenues. Order backlog was $381.2 million, up 8.2% year over year.
Payment & Merchandising Technologies segment generated revenues of $292.4 million, up 49% year over year. It represented 36.5% of first-quarter revenues. Order backlog was $301 million (including backlog related to the acquired Crane Currency business and Microtronic business) compared with $85.8 million in the prior-year quarter.
Engineered Materials segment’s revenues were $69.7 million, down 6.7% year over year. It represented 8.8% of first-quarter revenues. Order backlog at the segment decreased 24.7% year over year to $13.4 million.
Revenues from Fluid Handling increased 11.3% year over year to $266.6 million. It represented 33.4% of first-quarter revenues. Order backlog was $281.2 million, up 12.6% year over year.
Costs & Margins
In the reported quarter, Crane’s cost of goods sold increased 21.4% year over year. The same metric, as a percentage of revenues, came in at 65.2% compared with 63.8% in the prior-year quarter. Selling, general and administrative expenses, as a percentage of revenues, were 22.2% compared with 21.9% in the year-ago quarter.
Operating margin, before special items, expanded 80 bps year over year to 12.1%. Operating margin was 10.5%, up 30 bps from the year-ago quarter.
Balance Sheet and Cash Flow
As of Mar 31, 2018, Crane’s cash and cash equivalents were $642.3 million than $504.8 million in the year-ago quarter. Long-term debt increased to $1,138.5 million from $494.1 million as of Dec 31, 2017.
In the quarter, the company’s net cash generated from operating activities totaled $74.2 million compared with $3.5 million in the year-ago quarter. Free cash flow was $46.7 million in the same period. Dividend paid in the quarter was approximately $20.9 million.
Concurrent with the earnings release, Crane announced that its board of directors has approved the payment of a quarterly dividend of 35 cents to shareholders for second-quarter 2018. The dividend will be paid on Jun 8, 2018.
Outlook
For 2018, Crane anticipates earnings, excluding special items, to be within the $5.45-$5.65 per share range compared with $5.35-$5.55 guided earlier. GAAP earnings are envisioned to be in the band of $4.75-$4.95 than the earlier projected range of $4.65-$4.85 per share.
Free cash flow is projected to lie within the $240-$270 million range compared with 220-$250 million anticipated earlier.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to four lower. In the past month, the consensus estimate has shifted downward by 5.7% due to these changes.
Crane Company Price and Consensus
Crane Company Price and Consensus | Crane Company Quote
VGM Scores
At this time, CR has a nice Growth Score of B, though it is lagging a bit on the momentum front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Based on our scores, the stock is more suitable for growth investors than those looking for value and momentum.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, CR has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.