Crane Executing Well Despite A Lot Of Cross-Currents

The good, and bad, of running a conglomerate is that there’s always a lot going on – it’s relatively rare for a diversified business to see all of its units doing well (or poorly) at the same time. In the case of Crane (CR), Fluid Handling (or FH) is doing well on underlying strength in a range of process industries, and Aerospace & Electronics (or AE) is likewise benefiting from strong trends in the commercial aerospace market. On the flip side, the Payment and Merchandising Tech (or PMT) business is dealing with challenging comps in the currency business and Engineered Materials (or EM) is suffering from weakness in the RV market.

All told, though, Crane is doing well in absolute and relative terms, and while there are some signs of slowing momentum, I believe the company will hit its near-term targets and generate mid-single-digit long-term FCF growth. I don’t know whether CIRCOR (CIR) management can be persuaded to see reason, but Crane has other M&A prospects to consider, and the valuation remains surprisingly reasonable.

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Crane Executing Well Despite A Lot Of Cross-Currents