Crane Company (CR) is one of the original S&P 500 legacy companies and it’s still returning value to investors year after year. This Zacks #1 Rank (strong buy) has a forward P/E of just 14.8.
You might not know the Crane name, but you know some of its products especially its vending machines.
Founded in 1855, the company is a diversified manufacturer in 5 business segments including Aerospace & Electronics which makes landing systems and electronics such as those on Mars Rovers and fighter jets; Engineered Materials such as composites; Merchandising Systems like vending machines; Fluid Control Systems; and Controls.
Crane Beat By 17% in the First Quarter
On Apr 18, for the 5th consecutive quarter, Crane surprised on the Zacks Consensus Estimate. Earnings per share were 76 cents compared to the consensus of 65 cents.
Sales rose 15% to $611 million from a year ago mainly due to an 11% increase in core sales.
Aerospace & Electronics saw increasing momentum as sales jumped 21%. The Engineered Materials segment saw sales jump 15% due to higher demand from transportation customers and higher revenue across recreational vehicle and building products end markets.
Fluid Handling sales grew 7% to $264.1 million. Orders were especially strong in ChemPharma and Energy.
Raised 2011 Guidance
Given the better-than-expected first quarter results, Crane raised its first quarter sales and earnings guidance.
Sales are now expected to rise between 10% and 12%, up from the prior guidance of 7% to 9%.
Earnings per share are now expected in the range of $3.05 to $3.25, much higher than its prior guidance of $2.80 to $3.00 per share.
Zacks Consensus Estimates Rise
Since the company raised guidance in April, analysts have also raised estimates. The 2011 Zacks Consensus Estimate jumped to $3.24 from $2.96, which is at the very high end of the company’s range.
This is earnings growth of 25%.
Analysts also see double digit earnings growth in 2012 as the 2012 Zacks Consensus has also moved higher in the last 60 days, gaining 18 cents to $3.60 per share. That is earnings growth of 11.6%.
Crane is expected to report its second quarter results on July 25.
Never Cut Its Dividend During the Crisis
Many companies cut or eliminated their dividends during the financial crisis but Crane did not.
The dividend was 18 cents per share in 2008 and has actually risen to 23 cents per share in the recent payout, which was on May 26.
This is a yield of 1.9%.
Shares Near 20 Year High But Still Have Value
Shares have really rebounded since the financial crisis. The company is now trading near a 20-year high.
Despite the surge in the shares, it still has value characteristics.
In addition to a P/E under 15, Crane has a price-to-book ratio of 2.7. A P/B ratio under 3.0 is considered “value.”
As an added bonus to the cheap valuation, the company has a solid 1-year return on equity (ROE) of 17.1%, well above its peers at 11.6%.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her at twitter.com/traceyryniec.
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