HomeMost PopularInvestingThe Unstoppable Flowserve (FLS): Riding the Waves of Prosperity Against All Odds

The Unstoppable Flowserve (FLS): Riding the Waves of Prosperity Against All Odds

Actionable Trade Ideas

always free

Riding a wave of prosperity, Flowserve Corporation (FLS) has navigated through turbulent waters to emerge stronger than ever. Bolstered by soaring maintenance, repair, operations, and aftermarket activity, the company has seen a surge in robust bookings. The company’s strategic approach, encapsulated in the Diversify, Decarbonize, and Digitize model, has served as a sturdy lighthouse guiding it through storms. Noteworthy is the recent accomplishment of exceeding $1 billion in bookings for the eighth consecutive quarter with fourth-quarter bookings standing strong at $1.04 billion.

A testament to its resilience, Flowserve’s original equipment and aftermarket businesses have provided a substantial boost to both the Flowserve Pump Division and the Flow Control Division segments. With revenues witnessing a significant uptick of 12.6% and 11.3% year-over-year growth in the fourth quarter of 2023, the company seems poised for a stellar 2024. Projecting a revenue growth in the range of 4-6%, accompanied by an anticipated surge of 19.1% in adjusted earnings per share between $2.40 and $2.60 compared to the previous year, Flowserve’s trajectory is set in no uncertain terms.

Manifesting commitment to its shareholders, the company disbursed dividends amounting to $105 million in 2023 alone. Bolstering its prowess further, Flowserve stands firm with a robust cash and cash equivalents position of $545.7 million as of the end of 2023, with its debt falling significantly short at $66.2 million due within a year.

In a year overshadowed by the unforeseen turbulence of the pandemic, Flowserve shone brightly, outperforming its industry counterparts by a remarkable 32.6% growth against the industry’s 29.6% upsurge. Nonetheless, challenges loom on the horizon as the company grapples with escalating costs and expenses. With costs of sales and selling, general, and administrative expenses witnessing hikes of 16.1% and 17.9% respectively in 2023, Flowserve must tread cautiously to maintain its course.

Albeit dealing with the headwinds, Flowserve’s realignment plan promises considerable benefits in the long run. However, the realignment expenses might cast a shadow over the company’s profitability. For instance, the incorporation of realignment expenses amounting to $30 million in the adjusted earnings guidance for 2024 signals a cautious optimism.

The Ripple Effect: Competition and Opportunity

In the bustling waters of the industrial sector, opportunities and competition abound. Within the same domain as Flowserve, three noteworthy companies have emerged as bright contenders. The trio of Applied Industrial Technologies (AIT), Parker-Hannifin Corporation (PH), and Luxfer Holdings plc (LXFR) have each been accorded a Zacks Rank #2 (Buy), reflecting their potential in the market.

Applied Industrial Technologies boasts a remarkable trailing four-quarter average earnings surprise of 10.4%, while Parker-Hannifin Corporation surpasses with a striking 14.4% average earnings surprise over the same period. Luxfer Holdings plc springs forth with a remarkable 82.7% average earnings surprise. The resilience and tenacity displayed by these companies in the face of adversities mirror the ethos guiding Flowserve.

As the tide continues to turn for these companies, their unwavering pursuit of excellence promises a future filled with opportunities and growth. While Flowserve steers through the currents of change, it remains a stalwart beacon in the industrial landscape, navigating the waters with poise and purpose.

Swing Trading Ideas and Market Commentary

Need some new swing ideas? Get free weekly swing ideas and market commentary from Jonathan Bernstein here: Swing Trading.

Explore More

Weekly In-Depth Market Analysis and Actionable Trade Ideas

Get institutional-level analysis and trade ideas to take your trading to the next level, sign up for free and become apart of the community.