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Crane (CR) Displays Bright Prospects, Headwinds Persist

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Crane Holdings Co. (CR - Free Report) has been benefiting from strength in its end markets, including general industrial, chemical and pharmaceutical. Solid momentum in the company's commercial original equipment and aftermarket businesses has been driving its performance of late. Also, its efficient management team, investment in technology, efforts to develop products, improving order trends and a focus on commercial excellence have been proving beneficial. For 2022, its core sales are predicted to grow in the range of 4-6% year over year.

Divestment of non-core assets or businesses is likely to be advantageous for the company. In May 2022, the company divested its Crane Supply business for CAD 380 million. The divestment will likely enable CR to better focus on and efficiently direct resources to its Process Flow Technologies businesses. Also, the company’s decision to sell its Engineered Materials segment (announced in May 2021) is expected to allow it to concentrate on its core businesses.

Crane remains committed to rewarding its shareholders through dividend payments and share repurchases. In the first three months of 2022, CR paid out dividends worth $26.7 million and repurchased shares worth $175.8 million. In January 2022, it hiked the quarterly dividend rate by 9%. It is worth noting that in April 2022, CR completed its share repurchase program worth $300 million.

However, rising costs and operating expenses remain a concern for CR. In the first quarter, its cost of sales increased 0.7% on a year-over-year basis, while selling, general and administrative expenses jumped 14.6%. Inflationary pressures, supply-chain disturbances and pandemic impacts were spoilsports in the quarter. These issues are expected to persist in the near term.

Given its extensive presence across the international markets, the company remains vulnerable to foreign-exchange headwinds and geopolitical issues. Crane expects forex woes to adversely impact sales by 1.5% in 2022.

Zacks Investment Research
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In the past six months, this Zacks Rank #3 (Hold) stock has lost 15.1% compared with the industry’s decline of 19%.

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