A month has gone by since the last earnings report for Crane Holdings (
CR Quick Quote CR - Free Report) . Shares have added about 10.1% 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 Holdings 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 drivers.
Crane's Earnings Beat Estimates in Q2, Sales Rise Y/Y
Crane kept its earnings beat streak alive in the second quarter of 2022, delivering better-than-expected results for the sixth consecutive quarter. The quarterly earnings surpassed the Zacks Consensus Estimate by 5%. Sales surprise is 6%.
Adjusted earnings were $1.90 per share, surpassing the Zacks Consensus Estimate of $1.81. The bottom line increased 3.8% from the year-ago quarter’s figure of $1.83. Revenue Details
In the quarter, Crane’s net sales were $864 million, up year over year owing to strength across its end-markets.
The quarterly net sales surpassed the Zacks Consensus Estimate of $815 million. Crane reports net sales under four segments, namely Process Flow Technologies, Payment & Merchandising Technologies, Aerospace & Electronics, and Engineered Materials (presented as continuing operations as of Jun 30, 2022). The segmental information is briefly discussed below: Revenues from Process Flow Technologies (representing 34.3% of the quarter’s total revenues) were $296 million, declining 5% from the year-ago quarter’s tally. Movements in foreign currencies had an adverse impact of 4% on sales. The divestiture of Crane Supply impacted segmental revenues by 7%. The segment’s order backlog was $348.6 million in the reported quarter, reflecting a sequential decline of 6.4%. Revenues from Payment & Merchandising Technologies (representing 38.6% of the quarter’s total revenues) totaled $334 million, increasing 2% year over year on a 7% increase in core sales. Foreign currency movements had an adverse impact of 5% on segmental revenues. The order backlog at the end of the reported quarter was $482 million, up 12.4%, sequentially. Revenues from the Aerospace & Electronics segment (representing 18.7% of the quarter’s total revenues) were $161.5 million, increasing 3% year over year. The order backlog at the end of the quarter was $534.4 million, up 5.1%, sequentially. Revenues from the Engineered Materials segment (representing 8.4% of the quarter’s total revenues) were $72.8 million, increasing 23% year over year. The order backlog at the end of the quarter was $22 million, down 27.6%, sequentially. Margin Profile
In the second quarter, Crane’s cost of sales of $535.7 million reflected a 2.3% increase from the year-ago quarter’s number. The metric represented 62% of net sales compared with 61.2% in the year-ago quarter. Selling, general and administrative expenses increased 9% to $204.2 million. The same represented 23.6% of net sales compared with 21.9% in the year-ago quarter.
Adjusted operating profit in the second quarter decreased 2% year over year to $145 million, while margin declined 50 basis points to 16.8%. Interest expenses, net, in the reported quarter were $11.4 million, in line with the year-ago figure. Balance Sheet and Cash Flow
Exiting the second quarter, Crane had cash and cash equivalents of $650.6 million, up 35.9% from $478.6 million at the end of the fourth quarter of 2021. The long-term debt balance was $842.9 million compared with the previous quarter’s $842.7 million.
In the first six months of 2022, Crane made no repayment of commercial paper (maturity >90 days). In the first six months of 2022, CR generated a net cash of $49 million from operating activities compared with $206.7 million generated in the year-ago-period. Capital expenditure was $25.2 million in the same period, higher than $14.6 million spent in the previous year. Free cash flow was $23.8 million in the first half of 2022 compared with $192.1 million free cash flow generated in the year-ago period. Shareholder-Friendly Policy
In second-quarter 2022, Crane used $26.4 million for paying out dividends, up 4.8% from the year-ago quarter’s level. Share reacquisition in the quarter amounted to $27.9 million.
Concurrent with the earnings release, Crane announced a dividend of 47 cents per share for the third quarter of 2022. CR will pay out the dividend on Sep 14, 2022, to its shareholders of record as of Aug 31, 2022. 2022 Outlook
Crane adjusted its full-year GAAP earnings from continued operations to $9.80-$10.20 from the earlier issued projection of $6.80-$7.20. Management anticipates adjusted earnings per share of $7.45-$7.85 (excluding special items) for the year.
CR expects to generate $385-$425 million of cash from operating activities in the current year. Capital expenditures are estimated to be $60 million for the current year. Adjusted free cash flow is projected to be $350-$390 million for the current year. How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -7.08% due to these changes.
At this time, Crane Holdings has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile 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.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Crane Holdings has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.