Crane NXT (CXT)
We’d avoid investing in Crane NXT. It falls short of our quality expectations, and there are much better stocks available in the market.― StockStory Analyst Team
1. News
2. Summary
Why We Think Crane NXT Will Underperform
Born from a corporate transformation completed in 2023, Crane NXT (NYSE:CXT) provides specialized technology solutions for payment processing, banknote security, and authentication systems for financial institutions and businesses.
- Earnings per share fell by 6.3% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- On the plus side, its excellent adjusted operating margin highlights the strength of its business model
Crane NXT is in the penalty box. We’d rather invest in businesses with stronger moats.
Why There Are Better Opportunities Than Crane NXT
Crane NXT is trading at $58.35 per share, or 12.7x forward P/E. Crane NXT’s valuation may seem like a bargain, especially when stacked up against other business services companies. We remind you that you often get what you pay for, though.
Cheap stocks can look like a great deal at first glance, but they can be value traps. They often have less earnings power, meaning there is more reliance on a re-rating to generate good returns - an unlikely scenario for low-quality companies.
3. Crane NXT (CXT) Research Report: Q3 CY2025 Update
Payment technology company Crane NXT (NYSE:CXT) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 10.3% year on year to $445.1 million. Its non-GAAP profit of $1.28 per share was 1.8% above analysts’ consensus estimates.
Crane NXT (CXT) Q3 CY2025 Highlights:
- Revenue: $445.1 million vs analyst estimates of $429.8 million (10.3% year-on-year growth, 3.6% beat)
- Adjusted EPS: $1.28 vs analyst estimates of $1.26 (1.8% beat)
- Adjusted EBITDA: $122.4 million vs analyst estimates of $117.7 million (27.5% margin, 4% beat)
- Management lowered its full-year Adjusted EPS guidance to $4.05 at the midpoint, a 2.4% decrease
- Operating Margin: 18.4%, in line with the same quarter last year
- Free Cash Flow Margin: 17.7%, up from 14.6% in the same quarter last year
- Backlog: $557 million at quarter end
- Market Capitalization: $3.62 billion
Company Overview
Born from a corporate transformation completed in 2023, Crane NXT (NYSE:CXT) provides specialized technology solutions for payment processing, banknote security, and authentication systems for financial institutions and businesses.
Crane NXT operates through two main business segments: Crane Payment Innovations (CPI) and Crane Currency. The CPI division develops and manufactures electronic payment systems that validate, accept, and dispense cash and other payment methods. These systems are found in vending machines, gaming devices, retail point-of-sale terminals, and self-checkout kiosks. For example, when you insert bills into a vending machine or casino gaming device, there's a good chance you're interacting with CPI technology that authenticates your currency.
The Crane Currency segment focuses on micro-optic security technology for physical products, particularly banknotes. This division works with central banks and government agencies worldwide to design and produce secure currency with advanced anti-counterfeiting features. When a central bank needs to update its currency with new security elements, Crane Currency might provide the specialized security threads or holograms that make counterfeiting more difficult.
The company generates revenue through equipment sales, service contracts, and ongoing maintenance of its systems. Its customer base spans across retail, gaming, financial services, and government sectors. For payment solutions, customers include vending machine operators, retailers, and gaming establishments. For currency security, customers are primarily central banks and government mints.
Crane NXT maintains research and development facilities in the United States, United Kingdom, Mexico, Japan, Germany, Sweden, and Malta. This global footprint allows the company to serve customers across different regions while adapting to local payment preferences and security requirements. The company's technologies incorporate sophisticated optical, mechanical, and electronic systems that require specialized manufacturing capabilities and intellectual property.
4. Specialized Technology
Companies in this sector, especially if they invest wisely, could see demand tailwinds as the world moves towards more IoT (Internet of Things), automation, and analytics. Enterprises across most industries will balk at taking these journeys solo and will enlist companies with expertise and scale in these areas. However, headwinds could include rising competition from larger technology firms, as digitization lowers barriers to entry in the space. Additionally, companies in the space will likely face evolving regulatory scrutiny over data privacy, particularly for surveillance and security technologies. This could make companies have to continually pivot and invest.
Crane NXT competes with payment technology providers like NCR Voyix (NYSE:VYX), Diebold Nixdorf, and Glory Global Solutions in the payment automation space, while its currency security business faces competition from De La Rue plc (LSE:DLAR) and security printing companies like Giesecke+Devrient.
5. Revenue Growth
A company’s top-line performance is one signal of its overall business quality. Strong growth can indicate it’s riding a successful new product or emerging trend.
With $1.58 billion in revenue over the past 12 months, Crane NXT is a small player in the business services space, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and numerous distribution channels.
This quarter, Crane NXT reported year-on-year revenue growth of 10.3%, and its $445.1 million of revenue exceeded Wall Street’s estimates by 3.6%.
Looking ahead, sell-side analysts expect revenue to grow 8.5% over the next 12 months, similar to its two-year rate. This projection is commendable and indicates its newer products and services will fuel better top-line performance.
6. Operating Margin
Crane NXT has been a well-oiled machine over the last four years. It demonstrated elite profitability for a business services business, boasting an average operating margin of 19%.
Looking at the trend in its profitability, Crane NXT’s operating margin decreased by 8.6 percentage points over the last four years. Even though its historical margin was healthy, shareholders will want to see Crane NXT become more profitable in the future.
In Q3, Crane NXT generated an operating margin profit margin of 18.4%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.
7. Cash Is King
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 NXT has shown terrific cash profitability, enabling it to reinvest, return capital to investors, and stay ahead of the competition while maintaining an ample cushion. The company’s free cash flow margin was among the best in the business services sector, averaging 15.8% over the last four years.
Taking a step back, we can see that Crane NXT’s margin dropped by 12 percentage points during that time. If its declines continue, it could signal increasing investment needs and capital intensity.
Crane NXT’s free cash flow clocked in at $78.7 million in Q3, equivalent to a 17.7% margin. This result was good as its margin was 3.1 percentage points higher than in the same quarter last year, but we wouldn’t put too much weight on the short term because investment needs can be seasonal, causing temporary swings. Long-term trends trump fluctuations.
8. Balance Sheet Assessment
Crane NXT reported $182.4 million of cash and $1.08 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.
With $390.9 million of EBITDA over the last 12 months, we view Crane NXT’s 2.3× net-debt-to-EBITDA ratio as safe. We also see its $23.2 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.
9. Key Takeaways from Crane NXT’s Q3 Results
We enjoyed seeing Crane NXT beat analysts’ revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its full-year EPS guidance slightly missed. Zooming out, we think this was a mixed quarter. The stock remained flat at $64.20 immediately following the results.
10. Is Now The Time To Buy Crane NXT?
Updated: December 4, 2025 at 11:05 PM EST
A common mistake we notice when investors are deciding whether to buy a stock or not is that they simply look at the latest earnings results. Business quality and valuation matter more, so we urge you to understand these dynamics as well.
We see the value of companies helping their customers, but in the case of Crane NXT, we’re out. Although the company’s powerful free cash flow generation enables it to stay ahead of the competition through consistent reinvestment of profits, the downside is its declining EPS over the last two years makes it a less attractive asset to the public markets. On top of that, the company’s cash profitability fell over the last four years.
Crane NXT’s P/E ratio based on the next 12 months is 12.7x. This valuation multiple is fair, but we don’t have much confidence in the company. There are more exciting stocks to buy at the moment.
Wall Street analysts have a consensus one-year price target of $77.33 on the company (compared to the current share price of $58.35).
Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.