Crane Co (CR, Financial) has recently experienced a notable daily loss of -5.16%, contrasting with a 3-month gain of 18.12%. With an Earnings Per Share (EPS) of 5.46, investors are prompted to question whether the stock is significantly overvalued. This article delves into a valuation analysis to uncover the true worth of Crane Co (CR) shares, inviting readers to explore the detailed insights that follow.
Company Introduction
Crane Co is a diversified industrial firm with a history of manufacturing a broad range of products, including valves, pumps, aerospace components, and fiberglass-reinforced plastic panels. The company operates through three segments: aerospace and electronics, process flow technologies, and engineered materials, generating approximately $2 billion in revenue in 2022. Currently, Crane Co's stock price stands at $104.31, presenting a stark contrast to the Fair Value (GF Value) of $54.77, which suggests the stock might be significantly overvalued. The following analysis will provide a deeper understanding of Crane Co's financial position and market valuation.
Summarize GF Value
The GF Value is a unique measure of a stock's intrinsic value, incorporating historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. According to this metric, Crane Co (CR, Financial) is significantly overvalued. The stock's fair value is estimated by considering historical multiples, internal adjustments, and future business performance. A price above the GF Value Line indicates potential overvaluation and poorer future returns, whereas a price below suggests undervaluation with prospects for higher returns. At the current price of $104.31, Crane Co's stock appears to be significantly overvalued.
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Financial Strength
When considering an investment, the financial strength of a company is a crucial factor to mitigate the risk of capital loss. Crane Co's cash-to-debt ratio of 1.05 places it lower than 51.88% of its peers in the Industrial Products industry. Despite this, the company's overall financial strength is rated a strong 8 out of 10 by GuruFocus, suggesting a robust financial condition.
Profitability and Growth
Consistent profitability is a less risky proposition for investors, and Crane Co has demonstrated this with 10 years of profitability. The company's operating margin of 18.4% ranks higher than 89.04% of its industry counterparts, signaling strong profitability. Furthermore, Crane Co's growth is commendable, with a 3-year average EBITDA growth rate of 37.6%, outperforming 85.53% of companies in the Industrial Products industry, which is a key factor in growth valuation.
ROIC vs WACC
Comparing Return on Invested Capital (ROIC) with the Weighted Average Cost of Capital (WACC) is another way to assess profitability. Crane Co's ROIC of 19.95 exceeds its WACC of 12.49, indicating the company is creating value for shareholders. This comparison is a testament to Crane Co's efficient capital management.
Conclusion
In summary, despite the strong financial condition and profitability, Crane Co (CR, Financial) is currently considered significantly overvalued. Its growth prospects, however, remain positive, ranking better than many of its industry peers. Those interested in Crane Co's financials can explore its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
