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Will Flowserve (FLS) Deliver a Beat this Earnings Season?
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We expect Flowserve Corporation (FLS - Free Report) to beat earnings when it reports first-quarter 2017 results on May 1, after the closing bell.
The 10.8% positive earnings surprise in the last quarter marked a reversal to a string of misses by Flowserve. Overall, the company has a negative average surprise of 4.4% for the trailing four quarters, thanks to three misses in the last four quarters.
We expect the company to beat earnings in the about-to-be-reported quarter.
Why a Likely Positive Surprise?
Our proven model shows an earnings beat for Flowserve as it possesses the key components.
Zacks ESP:Earnings ESP for Flowserve is +5.00% as the Most Accurate estimate is pegged at 21 cents while the Zacks Consensus Estimate is 20 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Flowserve has a Zacks Rank #3 (Hold). Note that stocks with Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
The favorable combination of Flowserve’s Zacks Rank #3 and +5.00% ESP makes us reasonably confident of a positive earnings beat.
Growth Factors this Past Quarter
Flowserve’s key strengths, including strong operational model, solid productivity, considerable aftermarket content and geographical diversity, are expected to drive results in the soon-to-be reported quarter. Over the past few quarters, the company has been witnessing stabilization in core aftermarket activities concerning parts, services and repairs as markets return to regular maintenance schedules.
We believe the company’s top line in the first quarter is likely to advantage from modest natural gas investments in North America and Asia. Also, increased bidding activity in the desalination space is expected to boost sales. This apart, the company’s restructuring initiatives over the past few quarters are expected to prove conducive to first-quarter results.
Currently, the company is pursuing a $400-million multi-year investment plan, which is expected to result in $195 million of savings in 2017. These initiatives helped the company garner savings of $12 million in fourth-quarter 2016 and $93 million in full-year 2016. Further, Flowserve is planning to trim its workforce by 15–20% as compared to the 2015 levels. We believe savings from these restructuring activities will boost profits in the upcoming quarter.
In addition, relative stability of oil at around the $45–$50 level over the past couple of quarters is encouraging. During first-quarter 2017, the company clinched a contract worth $80 million to provide pumps and ebulators for the Hengli Integrated Refining Complex Project. Modest recovery in client spending also looks promising.
Other Stocks to Consider
Here are some other companies that you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat this quarter:
Eaton Corporation plc (ETN - Free Report) has an Earnings ESP of +2.30% and a Zacks Rank #2.
Altra Industrial Motion Corp. has an Earnings ESP of +5.00% and a Zacks Rank #2.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 ""Strong Buys"" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 ""Strong Sells."" Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>
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Will Flowserve (FLS) Deliver a Beat this Earnings Season?
We expect Flowserve Corporation (FLS - Free Report) to beat earnings when it reports first-quarter 2017 results on May 1, after the closing bell.
The 10.8% positive earnings surprise in the last quarter marked a reversal to a string of misses by Flowserve. Overall, the company has a negative average surprise of 4.4% for the trailing four quarters, thanks to three misses in the last four quarters.
We expect the company to beat earnings in the about-to-be-reported quarter.
Why a Likely Positive Surprise?
Our proven model shows an earnings beat for Flowserve as it possesses the key components.
Zacks ESP: Earnings ESP for Flowserve is +5.00% as the Most Accurate estimate is pegged at 21 cents while the Zacks Consensus Estimate is 20 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Flowserve Corporation Price and EPS Surprise
Flowserve Corporation Price and EPS Surprise | Flowserve Corporation Quote
Zacks Rank: Flowserve has a Zacks Rank #3 (Hold). Note that stocks with Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
The favorable combination of Flowserve’s Zacks Rank #3 and +5.00% ESP makes us reasonably confident of a positive earnings beat.
Growth Factors this Past Quarter
Flowserve’s key strengths, including strong operational model, solid productivity, considerable aftermarket content and geographical diversity, are expected to drive results in the soon-to-be reported quarter. Over the past few quarters, the company has been witnessing stabilization in core aftermarket activities concerning parts, services and repairs as markets return to regular maintenance schedules.
We believe the company’s top line in the first quarter is likely to advantage from modest natural gas investments in North America and Asia. Also, increased bidding activity in the desalination space is expected to boost sales. This apart, the company’s restructuring initiatives over the past few quarters are expected to prove conducive to first-quarter results.
Currently, the company is pursuing a $400-million multi-year investment plan, which is expected to result in $195 million of savings in 2017. These initiatives helped the company garner savings of $12 million in fourth-quarter 2016 and $93 million in full-year 2016. Further, Flowserve is planning to trim its workforce by 15–20% as compared to the 2015 levels. We believe savings from these restructuring activities will boost profits in the upcoming quarter.
In addition, relative stability of oil at around the $45–$50 level over the past couple of quarters is encouraging. During first-quarter 2017, the company clinched a contract worth $80 million to provide pumps and ebulators for the Hengli Integrated Refining Complex Project. Modest recovery in client spending also looks promising.
Other Stocks to Consider
Here are some other companies that you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat this quarter:
AGCO Corporation (AGCO - Free Report) has an Earnings ESP of +5.88% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Eaton Corporation plc (ETN - Free Report) has an Earnings ESP of +2.30% and a Zacks Rank #2.
Altra Industrial Motion Corp. has an Earnings ESP of +5.00% and a Zacks Rank #2.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 ""Strong Buys"" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 ""Strong Sells."" Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>