Crane (CR) Hits New 52-Week High On Solid Growth Prospects

Shares of Crane Company (NYSE:CR) reached a new 52-week high of $82.89 during its trading session on Jul 10. This apex improved upon the last 52-week high of $82.35 on Apr 25.

In the last one year, the stock has yielded 40.94% return, outperforming a mere 0.85% gain recorded by the Zacks categorized Diversified Operations industry.

On Jul 10, Crane closed its trading session at $82.31 per share, yielding a year-to-date return of roughly 14.1%. The trading volume for the session was approximately 0.24 million shares. Positive earnings estimate revisions for 2017 as well as earnings growth expectation of 10.10% for the next three to five years indicate the stock’s potential for further price appreciation.

Growth Drivers

Market sentiments have been favoring Crane for quite some time now, especially after the company reported solid first-quarter 2017 results, with an earnings beat of 5.0%. Improvement in profitability was achieved on the back of higher sales generation from Payment & Merchandising Technologies and Engineered Materials segment and improvement in margins. Also, in the last four quarters (including results of the first quarter), the company pulled off an average positive earnings surprise of 8.41%.

In addition to impressive results, we believe that Crane’s guidance and its Westlock acquisition have contributed to the share price rally. For 2017, the company increased the lower-end of its previously issued earnings guidance by 5 cents to $4.35−$4.55 per share. Core sales will likely be flat to up 2%. Also, the company anticipates benefiting from increasing demand for productivity solutions in Payment & Merchandising Technologies segment, high growth aerospace programs in Aerospace & Electronics, recovering orders in Fluid Handling and strengthening end markets in Engineered Materials.

Crane acquired the assets of New Jersey-based Westlock Controls from Emerson Electric Co. (NYSE:EMR) in May. The $40 million cash transaction is consistent with the company’s inorganic expansionary policy. Westlock Controls specializes in manufacturing and distribution of switchboxes, position transmitters and other solutions for use in networking, monitoring and controlling process valves. The business generated revenues of $32 million in 2016.

We believe that Crane’s solid growth prospects have led to the positive revisions in earnings estimates. Over the last 60 days, the stock’s Zacks Consensus Estimate inched up 0.22% to $4.51 for 2017. This represents year-over-year growth of 6.50%.

Zacks Rank & Stocks to Consider

With a market capitalization of $4.9 billion, Crane Company currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the industry include Federal Signal Corporation (NYSE:FSS) and Hitachi Ltd. (OTC:HTHIY) . While Federal Signal sports a Zacks Rank #1 (Strong Buy), Hitachi carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Federal Signal reported better-than-expected results in the last quarter, with a positive earnings surprise of 16.67%. Also, earnings estimates for 2017 and 2018 increased over the last 60 days.

Hitachi’s earnings estimates for fiscal 2017 were revised upward in the last 60 days. Also, the company delivered an average positive earnings surprise of 158.49% over the last four quarters.

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