Crane (CR)

Industrial conglomerate Crane (NYSE:CR) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 7.5% year on year to $589.2 million. Its non-GAAP profit of $1.64 per share was 10.3% above analysts’ consensus estimates.

Company Overview

Based in Connecticut, Crane (NYSE:CR) is a diversified manufacturer of engineered industrial products, including fluid handling, and aerospace technologies.

Automation that increases efficiency and connected equipment that collects analyzable data have been trending, creating new demand for general industrial machinery companies. Those who innovate and create digitized solutions can spur sales and speed up replacement cycles, but all general industrial machinery companies are still at the whim of economic cycles. Consumer spending and interest rates, for example, can greatly impact the industrial production that drives demand for these companies’ offerings.

Competitors offering similar products include Flowserve (NYSE:FLS), Emerson Electric (NYSE:EMR), and ITT (NYSE:ITT).

A company’s long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Crane’s demand was weak and its revenue declined by 5.2% per year. This wasn’t a great result and suggests it’s a lower quality business.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Crane’s annualized revenue growth of 5.5% over the last two years is above its five-year trend, but we were still disappointed by the results.

We can dig further into the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Crane’s organic revenue averaged 6.6% year-on-year growth. Because this number aligns with its two-year revenue growth, we can see the company’s core operations (not acquisitions and divestitures) drove most of its results.

This quarter, Crane reported year-on-year revenue growth of 7.5%, and its $589.2 million of revenue exceeded Wall Street’s estimates by 1.6%.

Looking ahead, sell-side analysts expect revenue to grow 9.3% over the next 12 months, an improvement versus the last two years. This projection is healthy and suggests its newer products and services will spur better top-line performance.

Cost of sales for an industrials business is usually comprised of the direct labor, raw materials, and supplies needed to offer a product or service. These costs can be impacted by inflation and supply chain dynamics.

Crane’s unit economics are great compared to the broader industrials sector and signal that it enjoys product differentiation through quality or brand. As you can see below, it averaged an excellent 39.2% gross margin over the last five years. That means Crane only paid its suppliers $60.76 for every $100 in revenue.

Crane’s gross profit margin came in at 42.7% this quarter, up 8.2 percentage points year on year. Zooming out, however, Crane’s full-year margin has been trending down over the past 12 months, decreasing by 2.5 percentage points. If this move continues, it could suggest a more competitive environment with some pressure to lower prices and higher input costs (such as raw materials and manufacturing expenses).

Crane has been an efficient company over the last five years. It was one of the more profitable businesses in the industrials sector, boasting an average operating margin of 13.1%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Looking at the trend in its profitability, Crane’s operating margin rose by 3.2 percentage points over the last five years, showing its efficiency has improved.

In Q3, Crane generated an operating margin profit margin of 20.1%, up 2 percentage points year on year. Since its gross margin expanded more than its operating margin, we can infer that leverage on its cost of sales was the primary driver behind the recently higher efficiency.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Crane’s EPS grew at an unimpressive 5.5% compounded annual growth rate over the last five years. On the bright side, this performance was better than its 5.2% annualized revenue declines and tells us management adapted its cost structure in response to a challenging demand environment.

Diving into the nuances of Crane’s earnings can give us a better understanding of its performance. As we mentioned earlier, Crane’s operating margin expanded by 3.2 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Crane, its two-year annual EPS growth of 2.4% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q3, Crane reported adjusted EPS of $1.64, up from $1.38 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Crane’s full-year EPS of $5.78 to grow 6.8%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Crane has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 6.2% over the last five years, slightly better than the broader industrials sector.

Taking a step back, we can see that Crane’s margin expanded by 3.3 percentage points during that time. This is encouraging because it gives the company more optionality.

Crane’s free cash flow clocked in at $116.8 million in Q3, equivalent to a 19.8% margin. This result was good as its margin was 6.6 percentage points higher than in the same quarter last year, building on its favorable historical trend.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Although Crane hasn’t been the highest-quality company lately because of its poor top-line performance, it historically found a few growth initiatives that worked. Its five-year average ROIC was 13.4%, higher than most industrials businesses.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Crane’s ROIC has increased. This is a good sign, and we hope the company can keep improving.

Companies with more cash than debt have lower bankruptcy risk.

Crane is a profitable, well-capitalized company with $388.2 million of cash and no debt. This position is 3.5% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

We enjoyed seeing Crane beat analysts’ EBITDA expectations this quarter. We were also glad its organic revenue outperformed Wall Street’s estimates. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 3.5% to $198 immediately after reporting.

Updated: December 4, 2025 at 10:44 PM EST

When considering an investment in Crane, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

Crane’s business quality ultimately falls short of our standards. To kick things off, its revenue has declined over the last five years. And while its healthy gross margins indicate the value of its differentiated offerings, the downside is its unimpressive EPS growth over the last five years shows it’s failed to produce meaningful profits for shareholders. On top of that, its organic revenue growth has disappointed.

Crane’s P/E ratio based on the next 12 months is 29.4x. At this valuation, there’s a lot of good news priced in - we think there are better opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $213.89 on the company (compared to the current share price of $187.87).