Crane’s 4Q Profit Falls Short Of Estimates; Street Is Bullish

Crane Co. posted lower-than-expected results in the fourth quarter sending its shares down 2.7% in Monday’s extended trading session. The industrial product manufacturer reported a year-over-year decline in earnings and revenue due to the negative impact of the COVID-19 pandemic.

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Crane’s (CR) 4Q earnings of $1 per share declined 36.7% year-over-year and came in below the Street’s estimates of $1.10 per share. Its revenues of $726.4 million missed the consensus estimates of $736.2 million and decreased by 13% year-over-year. The company’s core sales declined by 21%. Meanwhile, acquisition and foreign currency exchange rates positively impacted sales.

As for 2021, Crane expects to generate adjusted earnings of between $4.90 – $5.10 per share, the midpoint of which reflects a growth of 30% year-over-year. Analysts had been looking for $4.95 a share in 2021.

Commenting on the 2021 guidance, Crane CEO Max Mitchell said, “This growth is supported by recent trends, including markets that strengthened towards the end of 2020 and order rates that accelerated throughout the fourth quarter.” (See CR stock analysis on TipRanks)

On Jan. 7, D.A. Davidson analyst Matt Summerville downgraded the stock to Hold from Buy but raised the price target to $80 (1.8% upside potential) from $75. The analyst said that the stock was his “favorite” among the SMID [small-mid]-cap value industrial tech names in early November.

However, he noted that the sharp gain in Crane shares in the past 2 months was “difficult to ignore.”

Overall, consensus among analysts is a Strong Buy based on 4 Buys and Summerville’s Hold. The average analyst price target of $84.50 implies upside potential of about 7.5% to current levels. Shares have declined 5.6% over the past year.