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Crane's Exposure to Headwinds Dims its Growth Opportunities


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We issued an updated research report on Crane Co. (CR - Analyst Report) on Sep 28, 2016. The company is renowned globally for its engineered industrial products.

Crane Co., with $3.6 billion in market capitalization, is facing severe headwinds that are restricting its growth. The discussion below will justify the company’s Zacks Rank #4 (Sell).

We believe Crane’s international exposure has raised many concerns related to unfavorable movements in foreign currencies as well as adverse trade regulations and uncertain economic conditions in the foreign nations it serves. The company has operations in many nations, including North and South America, Europe, the Middle East, Asia and Australia.

On the domestic front, Crane Co. has to comply with many governmental regulations, especially in the Aerospace & Electronics and Fluid Handling segments. Any failure to meet the requirements can attract penalties, denting the company’s profitability. In addition, the company faces a complex and competitive environment. Difficulties or delays in research & development or production and services, apart from failure of new products and technologies in the market, may hurt its competitive position.

For 2016, Crane Co. remains cautious of the adverse impacts from unfavorable foreign currency movements, which is likely to hurt top line by 2%, and volatility in commodity markets. Core sales growth is predicted to be within (1.5%) to +1.5% year over year. Over the last 30 days, the Zacks Consensus Estimate for the stock has been lowered by 0.2% for both 2016 and 2017 to $4.15 and $4.41, respectively.

We believe these headwinds more-than-offset the positive impacts from Crane Co’s diversified product portfolio, large client base and organic and inorganic growth initiatives.

Other Stocks to Consider

Some better-ranked stocks in the industry include Bunzl plc (BZLFY - Snapshot Report) , Barloworld Ltd (BRRAY - Snapshot Report) and Danaher Corp. (DHR - Analyst Report) .

Bunzl plc, a Zacks Rank #1 (Strong Buy) stock, has witnessed positive revisions in earnings estimates for 2016 and 2017 over the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Barloworld Ltd carries a Zacks Rank #2 (Buy). Estimates for the stocks have been revised upwards for fiscal 2016 and 2017. With similar ranking, Danaher Corp. holds a solid earnings surprise history, with an average of 5.12% for the last four quarters. Also, the stocks’ estimates have gone up for 2017.

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