$31.50
$149.00
bear $31.50
base $104.00
bull $149.00
margin of safety $65.00
market price* $205.83
Crane Company makes highly engineered components in two segments: Aerospace & Advanced Technologies (sensors, pressure and fluid controls, and electronic components for aircraft, defense and space, backlog about $1.08 billion at year-end 2025) and Process Flow Technologies (valves, pumps, cryogenic piping and related aftermarket parts for chemical, power, pharmaceutical and industrial customers, backlog about $0.36 billion). It became an independent company in April 2023, sold its Engineered Materials segment on January 1, 2025, and sold its old asbestos liabilities to a third party in 2022. On January 1, 2026 it closed the roughly $1.3 billion purchase of the Druck, Panametrics and Reuter-Stokes sensor brands from Baker Hughes and of optek-Danulat, funded by a new $900 million term loan and $250 million on its revolving credit line (both due September 2030) plus cash. How we measure earnings. We use cash generated by operations, remove swings in working capital, deduct stock-based pay as a real cost, and deduct only the capital spending needed to stand still. On that basis Crane earned about $2.61, $4.34 and $5.27 per share in 2023, 2024 and 2025. Adding back the interest the business pays (because we value the business first and then subtract debt) gives $2.97, $4.76 and $5.40. We used the median of those three post-separation years, $4.76 per share, as the starting level rather than the latest strong year. 2023 carried the costs of the separation and 2025 was helped by a $60 million working-capital swing that we stripped out, so the median is a fair middle. Our figures tie back to reported net income plus non-cash charges, less pension contributions, environmental payments and other cash items. Growth check: business cash flow per share grew about 13.5 percent in 2025 (owner earnings per share grew about 21 percent); our base case assumes only 2.5 percent growth per year, below both, and the 2025 jump was partly working-capital timing. The January 2026 acquisitions are not in the historical figures, so we added their contribution separately. First-half 2026 sales rose 25 percent and operating profit rose about $40 million, even after about $25 million of extra intangible amortization, deal costs and inventory step-up charges. After allowing for core growth, we credit the acquired businesses with about $75 million a year of cash earnings, or about $1.28 per share in the base case. That is an inference from reported results, not a disclosed figure, and the filings do not give the acquired businesses' earnings separately, so this is the least precise number in the analysis. At roughly 5.8 percent of the $1.3 billion price, the deal earns about what it costs at our 6 percent return requirement, so we do not treat it as a source of extra value. Base case: business cash flow starts at about $6.04 per share (the $4.76 median plus $1.28 from the acquisitions) and grows 2.5 percent a year for ten years, then stays flat. We credit growth only from the $1.44 billion order backlog (81 percent due to convert in 2026), price increases that have exceeded inflation, and the steady record of small bolt-on acquisitions. We leave out management's mid-single-digit core growth target, share gains, and margin improvement, which are not yet demonstrated. Flat earnings after year ten reflect the installed base of aircraft and industrial equipment that keeps needing Crane's parts. Business value is about $119 per share. Debt is about $1.10 billion against about $350 million of cash; treating about $150 million of that cash as needed to run the operations, net debt is about $900 million or $15 per share. That leaves about $104 per share. Bear case: business cash flow falls back to the 2023 level of $2.97 and the acquired businesses deliver only half our estimate, about $3.61 per share, with no growth for ten years and then a 3 percent annual decline as acquired customer relationships and aerospace or industrial orders fade. Refinancing the term loan and revolver in 2030 costs about 2 points more than today. Business value is about $48 per share; debt cost adds about $1.50 to net debt, taking it to about $17 per share; the result is about $31.50. Even here cash flow of about $210 million covers interest of about $60 million several times over, and the bank test (net debt to earnings no higher than 3.75 times) has room. Bull case: cash flow holds at the 2025 level of $5.40 plus $1.60 from the acquisitions (about $7.00), grows 5 percent a year for ten years as backlog converts, pricing holds and bolt-on deals continue, then stays flat. Business value is about $164 per share, less about $15 of net debt, gives about $149. What could make this wrong: the acquired earnings could be well below our estimate (integration, aerospace production cuts or a downturn in process markets), and roughly $1.3 billion of goodwill and intangibles from deals could be written down. Crane also still indemnifies the buyer of its former asbestos subsidiary for other historical liabilities, and remediation of a former plant site in Goodyear, Arizona continues; current cash costs are only a few million dollars a year and are already inside our cash flow. A shorter-term item that we could not reconcile from the filings is why first-quarter 2026 earnings per share lagged sales growth by so much; deal costs and step-up charges appear to explain most of it. The margin-of-safety price is about $65 per share, roughly 38 percent below our base value. The margin reflects the aerospace cycle, new borrowing, and the uncertainty in the acquired earnings.