Although the S&P 500 is down 1.7% over the past six months, Crane NXT’s stock price has fallen further to $51.13, losing shareholders 7.1% of their capital. This was partly driven by its softer quarterly results and might have investors contemplating their next move.

Is now the time to buy Crane NXT, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free.

Even with the cheaper entry price, we're cautious about Crane NXT. Here are three reasons why we avoid CXT and a stock we'd rather own.

Why Do We Think Crane NXT Will Underperform?

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.

1. Slow Organic Growth Suggests Waning Demand In Core Business

We can better understand Specialized Technology companies by analyzing their organic revenue. This metric gives visibility into Crane NXT’s core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement.

Over the last two years, Crane NXT’s organic revenue averaged 2.6% year-on-year growth. This performance was underwhelming and suggests it may need to improve its products, pricing, or go-to-market strategy, which can add an extra layer of complexity to its operations.

2. Projected Revenue Growth Is Slim

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.

Over the next 12 months, sell-side analysts expect Crane NXT’s revenue to rise by 2.2%, a deceleration versus its 5.3% annualized growth for the past two years. This projection is underwhelming and indicates its products and services will see some demand headwinds.

3. EPS Growth Has Stalled

Analyzing the change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.

Crane NXT’s flat EPS over the last two years was below its 5.3% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.

Final Judgment

We see the value of companies helping consumers, but in the case of Crane NXT, we’re out. After the recent drawdown, the stock trades at 11.7× forward price-to-earnings (or $51.13 per share). This valuation is reasonable, but the company’s shaky fundamentals present too much downside risk. There are better investments elsewhere. Let us point you toward one of our all-time favorite software stocks.

Stocks We Would Buy Instead of Crane NXT

With rates dropping, inflation stabilizing, and the elections in the rearview mirror, all signs point to the start of a new bull run - and we’re laser-focused on finding the best stocks for this upcoming cycle.

Put yourself in the driver’s seat by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.