Crane Company (CR) recently raised the bottom end of its full-year earnings guidance. The company has surprised on estimates 4 quarters in a row by an average of 24.22%. Crane is trading with a forward P/E of 14.42.
Company Description
Crane, which was founded in 1855, is a diversified manufacturer with 5 business segments and employees in 25 countries.
The segments include: Aerospace & Electronics which designs aircraft components including landing systems and electronics for military, medical and commercial applications including on Mars Rovers and fighter jets; Engineered Materials such as composites; Merchandising Systems like vending machines; Fluid Control Systems; and Controls.
Crane Surprised by 25% in the Third Quarter
On Oct 26, Crane reported third quarter results which easily beat the Zacks Consensus Estimate by 12 cents per share. Earnings per share were 60 cents compared to the Zacks Consensus of 48 cents. EPS was also 60 cents in the year ago period.
Sales, however, did decline by 14% to $551 million from $459 million in the third quarter of 2008. That included an organic business decline of about 15% and unfavorable foreign currency translation of 3%. These negatives were partially offset by increased sales in acquired businesses by about 4% in the quarter.
The company was generally pleased with the overall quarterly results.
“While sales in Engineered Materials, Merchandising Systems, Fluid Handling and Controls were lower than the prior year quarter, they improved slightly from the second quarter this year,” said Crane Co. president and chief executive officer, Eric C. Fast.
“Total Aerospace & Electronics segment sales have been declining for the past year primarily because of weaker demand in our long-cycle Aerospace business,” he added.
2009 Outlook
Given recent cost cutting that showed far greater monetary benefits than the company originally anticipated, Crane increased the lower end of its 2009 EPS guidance to $1.90 – $2.05 from $1.75 – $2.05.
It reaffirmed its sales guidance of $2.2 billion.
Zacks Consensus Estimates Spike Higher
Given the big beat and the narrowing of full year guidance, it’s not a surprise that analysts are raising estimates.
The fourth quarter Zacks Consensus Estimate has risen 4 cents to 52 cents in the last week as all 4 covering analysts raised in that time.
Full year 2009 Zacks Consensus Estimates also jumped by about 9% to $2.07 from $1.90 in the last week as, once again, all 4 covering analysts raised. This is higher than the company’s current EPS guidance.
Value Fundamentals
Crane is a Zacks #1 Rank (strong buy) stock. It is trading with a price-to-book of 2.03. The company also has a stellar 5-year average return on equity (ROE) of 19.50%. As an added bonus, shareholders get rewarded with a dividend currently yielding 2.60%.
