Crane Company (NYSE:CR) makes sensors, valves and electronics for commercial and military aircraft, and valves, pumps and flow-measurement equipment for chemical, water and pharmaceutical plants. Crane is one of the 10 best stocks to buy according to billionaire Mario Gabelli’s fund. Gabelli’s Small Cap Growth Fund named Crane among its top performers for the second quarter. See what the fund said about Crane.
Bull Case
Crane has years of aerospace growth ahead because it sells parts for new aircraft and for the spares and service those aircraft need later. Management expects higher aircraft build rates and more military demand as global tension continues, and the segment’s record backlog and new program wins give it visibility well beyond 2026. Crane’s aerospace segment sells sensors, valves and electronics to aircraft makers and militaries, and its process flow segment sells valves, pumps and meters that control liquids and gases in chemical plants, water systems and drug factories.
Crane’s long-term target is 7% to 9% core sales growth in aerospace and 3% to 5% in process flow. Process flow adds upside because management expects core sales to return to growth in the second half as orders pick up in chemicals across the Americas. Crane also grows by buying businesses that fit what it already sells, and management said the ones it bought in January are doing better than planned. The pump deal announced in September is the latest, and Crane has paid down debt, so it has room to do more. UBS and Deutsche Bank both kept Buy ratings on the stock in September, and analyst consensus rates it a Strong Buy. See the bullish outlook for Crane following its recent acquisitions.
Bear Case
Process Flow Technologies is the weak spot. Its core backlog is down 2% from a year ago, and management is counting on a second-half recovery that has not shown up in sales yet. Acquisitions lower margins in both segments this year, and every new deal, including the pump purchase, adds integration work. Commercial aerospace aftermarket demand can cool if airlines cut flying, and higher interest rates hurt expensive stocks.
How the Price Compares With the Market
It trades at a forward P/E of 29.0, which is 55% above the sector median of 18.7 and 20% above its own five-year average of 24.1. On enterprise value to EBITDA, Crane trades close to its own five-year average, 16.8 against 17.0, and that multiple is 22% above the sector median of 13.7. Analyst consensus has earnings per share growing about 16% in 2026 and 11.6% in 2027. The market’s earnings grow about 10% a year over the long run, so Crane’s 2027 growth runs a little ahead of the market at a multiple about 53% higher. The PEG ratio, which compares the P/E to growth, is 2.56 against 1.43 for the sector. If earnings grow 11.6% a year, the P/E falls to about 23 in two years and about 21 in three, while the market stays near 19.
Buyers at this price are betting that the aerospace backlog keeps earnings growing above 10% for several years and that process flow recovers. If growth slows toward the market’s pace, a multiple near 29 is hard to defend. See why profitable growth targets keep Mario Gabelli bullish on Crane Company.
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This article is originally published at Insider Monkey.
