Crane Co. (NYSE:CR) defied analyst predictions to release its third-quarter results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 8.9% to hit US$735m. Crane reported statutory earnings per share (EPS) US$0.97, which was a notable 20% above what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the consensus forecast from Crane's six analysts is for revenues of US$3.13b in 2021, which would reflect a reasonable 2.6% improvement in sales compared to the last 12 months. Per-share earnings are expected to surge 1,300% to US$5.15. Before this earnings report, the analysts had been forecasting revenues of US$3.08b and earnings per share (EPS) of US$5.05 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
There's been no major changes to the consensus price target of US$72.80, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Crane analyst has a price target of US$80.00 per share, while the most pessimistic values it at US$66.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Crane's revenue growth is expected to slow, with forecast 2.6% increase next year well below the historical 4.5%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.4% per year. Factoring in the forecast slowdown in growth, it seems obvious that Crane is also expected to grow slower than other industry participants.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Crane's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Crane's revenues are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Crane going out to 2024, and you can see them free on our platform here..
You still need to take note of risks, for example - Crane has 4 warning signs we think you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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