Crane Has Cycle And Performance Challenges, But Looks Undervalued

For as long as I’ve followed the company, Crane (CR) has never seemed all that popular. To some extent I can see why. The company’s a bit of a hodgepodge in a time when conglomerates aren’t so popular, there’s no software, automation, or electrification angle here, the company’s Fluid Handling business does seem to under-earn, and management has made some iffy capital allocation choices. Still, we’re talking about a company that has grown FCF at an annualized double-digit rate over the last decade while often generating double-digit returns on invested capital.

Since my last piece on the company, where I again thought the shares were undervalued even considering the pandemic, cycle risk, and so on, the shares have risen more than 50%, outperforming its peer group by a wide margin (close to 35%). Even with that outsized outperformance, I don’t think the shares are overvalued, and this still looks like a relative bargain even allowing for the less-than-perfect issues.

 

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Crane Has Cycle And Performance Challenges, But Looks Undervalued