CXT

We rate Crane NXT, Co. (CXT) as a Reduce with a composite score of 41.3/100 at a current price of $51.52. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in stability (61th percentile) and value (50th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (23th percentile) and investment (25th percentile) tempers our overall conviction. We assign a No Moat rating (38/100), Medium uncertainty, and Standard capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; sustainability of the current growth rate. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Crane NXT, Co. holds a top-quartile position (#0 of 50) within the Construction sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 41.3/100 places it at rank #3373 in our full 7,333-stock universe. At $3.9B in market capitalization, Crane NXT, Co. is a mid-cap player in the Construction space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue is growing at 20%, though momentum at the 23th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 42% (+18.8pp vs sector) narrow to operating margins of 15% (+7.7pp vs sector) and net margins of 9.0%, yielding a gross-to-net conversion rate of 21%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $51.52, Crane NXT, Co. is trading near fair value based on current fundamentals. Our value factor score of 50/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 20.7x (roughly in line with the sector median of 19.1x), EV/EBITDA of 15.8x (at a premium), P/B of 2.5x, P/S of 1.9x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a Medium uncertainty rating to Crane NXT, Co.. The stock presents a balanced risk profile: risk factors are within normal ranges. While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

We identify no major risk factors at this time. The company's stability factor sits at the 61th percentile with quality at the 46th percentile, both of which support our low-risk assessment. The absence of material leverage, profitability, or volatility concerns reduces the likelihood of a permanent capital loss scenario.

Key risk mitigants include: healthy gross margins of 42% provide a buffer against cost pressures; above-average stability (61th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate Crane NXT, Co.'s capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 11.9%, and the balance sheet is managed within acceptable parameters (D/E: 69%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; Crane NXT, Co. falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 1.00% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, Crane NXT, Co. receives a Reduce rating with a composite score of 41.3/100 (rank #3373 of 7,333). Our quantitative framework assigns a No Moat (38/100, trend: stable), Medium uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 41/100.

Our analysis does not support a constructive view on Crane NXT, Co. at this time. The combination of limited competitive advantages, medium uncertainty, and standard capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.