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Bear Of The Day: Flowserve Corp (FLS)

Zacks

Flowserve Corp (FLS) recently posted a big miss on top and on bottom. The company reported $0.22 when the Zacks Consensus Estimate was looking for $0.44 and that translates into a negative earnings surprise of 50%. The company also missed on the top line as well, with revenues of $877M when $923M were expected. The company also lowered guidance and that has sent earnings estimates lower and for that reason it is a Zacks Rank #5 (Strong Sell) and the Bear of the Day.

Description

Flowserve Corporation is one of the world's leading providers of industrial flow management services. Operating in 25 countries, with more than 7,000 employees, the company produces highly engineered and modular pumps, precision mechanical seals, smart, specialty, and quarter-turn valves and valve actuators, and a range of related flow management services.

Earnings Estimates


Before the company posted the miss and lowered guidance, the Zacks Consensus Estimate was looking for $1.78 in EPS. After the release, the Zacks Consensus Estimate slipped to $1.41 and has fallen another three cents since then.

The Zacks Consensus Estimate for 2018 has also moved lower. The number stood at $2.27 in June and fell to $2.04 in August and is now at $2.01.

Valuation

FLS has a mixed valuation. The Zacks Research System (ZRS) shows the stock trading at a 31.6x forward earnings multiple and that is a premium valuation to the industry average of 29.5x. The price to book for FLS is 3.3x and that is well below the industry average of 12.8x. Finally, the price to sales multiple of 1.5x is just a fraction below the 1.7x industry average..

For 2017, analysts are expecting revenues to contract 9% while earnings are expected to come in 37% below last years level. Next year, revenue growth of 4.1% and ESP growth of 45% is expected.

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