Crane Stock Soars, But the Best Could Be Yet to Come: Here's Why

Key Points

• Crane Company had a solid quarter and issued strong guidance for 2025.
• Widening margin and improving cash flow allowed another 12% dividend distribution increase. 
• Analysts' sentiment trends are positive and provide a lift for Crane's market. 

Crane Company NYSE: CR stock is up more than 100% since its separation from Crane NXT NYSE: CXT and can continue to rise by another triple-digit. The rise in stock price is driven by the company’s growth, positioning, margin, cash flow, and capital return outlook, which is robust. 

At the end of F2024, some of Crane Company's highlights include a 12% dividend increase and the ability to sustain the pace for years. The company is forecasted to grow earnings in alignment with the distribution CAGR, and the balance sheet is a fortress, so buybacks are likely, too. The takeaway for investors is that this industry-leading industrial product manufacturer is well-positioned to leverage its balance sheet, continue acquiring businesses, and drive shareholder value over the long term. 

Crane Ends 2024 With Strength: Affirms Outlook for 2025

Crane had a good FQ4, ending the year on solid footing and growing its ongoing operations by 12.1%. The top-line strength was driven by both operating segments and acquisitions, led by a 13% increase in Process Flow and underpinned by an 11% increase in Aerospace & Electronics. The core business grew by 8%, and acquisitions added 4%, with orders up 8% across the system. The backlog is also increasing, up 9%, leading the core business and indicating strength will continue in the new fiscal year. 

The margin news is robust. The company’s repositioning efforts and divestitures unlock value, including a wider margin. The operating margin increased by 290 and 320 basis points, GAAP and adjusted, to drive leverage bottom-line results. The GAAP and adjusted earnings are both up nearly 60% year-over-year and are expected to remain strong in 2025, with bottom-line growth to outpace the top. Guidance for 2025 includes a 5% top-line increase and a 12% bottom, sufficient to sustain the distribution increase outlook without impairment to the cash flow or balance sheet. 

The balance sheet is impeccable. The company is net cash with a total liability of about 0.6x equity, capable of acquisitions as the targets arise. The impact of the 2024 acquisitions is seen in the details, which include increased liabilities offset by increased assets and a 20% increase in shareholder equity. Equity is expected to grow at a leveraged pace as acquisitions compound core operations growth.

Analysts' Trends Give Lift to Crane Company’s Stock Price

The analysts’ trends lift Crane’s stock price and will likely continue to do so in 2025. They include increasing coverage, firming sentiment, and a rising stock price target. The post-release stock price surge has aligned the market with the late-January consensus, but it is expected to continue increasing as the year progresses. The late 2024 and early 2025 revisions suggest a possible move back into the low-$180 range. 

However, institutional activity poses a risk for this market. The institutions are bullish on Crane Company stock, own more than 75% of it, and bought on balance in 2024 but sold on balance in Q4. The shift to selling aligns with the market top and is a formidable headwind for price action.

The Technical Outlook: Crane Company Uptrend to Continue

Crane shares surged more than 13% following the Q4 release and 2025 guidance, confirming support at the 150-day EMA and the uptrend in the price action. The move created a strong, green candle formation and set the market up for a bullish momentum swing that could take it to a new all-time high. The risk is that resistance at the current high will cap the market. The critical level is near $190. A move above $190 could lead to a more significant gain with targets near $230.