Crane NXT has followed the market’s trajectory closely, rising in tandem with the S&P 500 over the past six months. The stock has climbed by 6.8% to $53.25 per share while the index has gained 7.7%.
Is CXT a buy right now? Find out in our full research report, it’s free.
Why Does Crane NXT Spark Debate?
Born from a corporate transformation completed in 2023, Crane NXT (NYSE: CXT) provides specialized technology solutions for payment processing, banknote security, and authentication systems for financial institutions and businesses.
Two Positive Attributes:
1. Surging Backlog Locks In Future Sales
In addition to reported revenue, backlog is a useful data point for analyzing Specialized Technology companies. This metric shows the value of outstanding orders that have not yet been executed or delivered, giving visibility into Crane NXT’s future revenue streams.
Crane NXT’s backlog punched in at $649.3 million in the latest quarter, and over the last two years, its year-on-year growth averaged 15.3%. This performance was fantastic and shows the company has a robust sales pipeline because it is accumulating more orders than it can fulfill. Its growth also suggests that customers are committing to Crane NXT for the long term, enhancing the business’s predictability. 
2. Projected Revenue Growth Is Remarkable
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite, though some deceleration is natural as businesses become larger.
Over the next 12 months, sell-side analysts expect Crane NXT’s revenue to rise by 16.3%, an improvement versus its 8.3% annualized growth for the past three years. This projection is eye-popping and suggests its newer products and services will fuel better top-line performance.
One Reason to Be Careful:
Free Cash Flow Margin Dropping
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
As you can see below, Crane NXT’s margin dropped by 8.1 percentage points over the last five years. It may have ticked higher more recently, but shareholders are likely hoping for its margin to at least revert to its historical level. If the longer-term trend returns, it could signal increasing investment needs and capital intensity. Crane NXT’s free cash flow margin for the trailing 12 months was 13.6%.
Final Judgment
Crane NXT’s merits more than compensate for its flaws, but at $53.25 per share (or 11.8× forward P/E), is now the right time to buy the stock? See for yourself in our comprehensive research report, it’s free.
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