Crane (CR) Divests Business Unit, Revises Its 2022 Outlook

Crane Holdings Co. CR yesterday announced that it has completed the divestment of its Crane Supply business to Deschenes Group Inc. for CAD 380 million. As noted, this divestment deal was announced in April 2022.

The company’s previously announced deal for the divestment of its Engineered Materials segment has been terminated. As a result, it has revised its earnings and revenue outlook for 2022.

The company’s shares lost 2.4% yesterday to eventually close the trading session at $93.33.

Inside the Headlines

The divestment of Crane Supply business is in sync with the company’s strategy of restructuring its business portfolio. This will likely enable it to better focus on and efficiently direct resources to its core businesses, thus offering value to its shareholders.

Last week, the company’s deal with GrupoVerzatec S.A. de C.V. to sell its Engineered Materials segment was terminated following certain objections related to the transaction from the Department of Justice.

The company announced its intention to separate into two independent entities in March 2022. Crane Holdings will consist of its Process Flow Technologies and Aerospace & Electronics businesses, and it will integrate its Engineered Materials unit to its core businesses. The other entity, Crane NXT will be comprised of the company’s Payment & Merchandising Technologies business. It’s worth noting that the separation is likely to be completed by March 2023.

As a result of the termination of the Engineered Materials divestment deal, Crane has revised its earlier-provided outlook for revenues and adjusted earnings for 2022. It currently anticipates its full-year GAAP earnings per share from continued operations to increase to $6.80-$7.20 from the earlier-issued projection of $6.35-$6.75. Management anticipates adjusted earnings per share of $7.45-$7.85 (excluding special items) for the year, higher than earnings of $7.00-$7.40 projected earlier. For 2022, the company expects sales to be $3.4 billion and adjusted operating margins of about 17%. As noted, the company will represent the Engineered Materials unit as its continued operations.

For second-quarter 2022, it anticipates adjusted earnings to decline modestly on a sequential basis owing to the timing of the divestiture of Crane Supply and the timing of certain customer shipments.

Zacks Rank, Estimates & Price Performance

Crane Holdings, with a $5.2-billion market capitalization, currently carries a Zacks Rank #3 (Hold). The company stands to benefit from an efficient management team, improving order trends, efforts to develop products, investment in technology and a focus on commercial excellence. However, rising high costs and high capital expenditure remain concerns for the company.

In the past 30 days, the Zacks Consensus Estimate for its earnings per share has been pegged at $7.39 for 2022 and $8.18 for 2023, suggesting growth of 1.4% and 0.6% from the respective 30-day-ago figures.

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The company’s shares have lost 10.5% compared with 8.1% decline recorded by the industry in the past three months.

Key Picks

Some better-ranked companies from the Zacks Industrial Products sector are discussed below:

Applied Industrial Technologies, Inc. AIT presently sports a Zacks Rank #1 (Strong Buy). AIT delivered a trailing four-quarter earnings surprise of 25.4%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

AIT’s earnings estimates have been stable for fiscal 2022 (ending June 2022) in the past 30 days. Its shares have inched up 2% in the past three months.

Roper Technologies, Inc. ROP presently has a Zacks Rank #2 (Buy). Its earnings surprise in the last four quarters was 2%, on average.

In the past 30 days, ROP’s earnings estimates have increased 0.4% for 2022. The stock has declined 4.2% in the past three months.

IDEX Corporation IEX is presently Zacks #2 Ranked. IEX’s earnings surprise in the last four quarters was 2.8%, on average.

In the past 30 days, the stock’s earnings estimates have increased 1.9% for 2022. IEX has declined 1.7% in the past three months.

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