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Flowserve (FLS) to Report Q4 Earnings: What's in the Cards?

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Flowserve Corporation (FLS - Free Report) is scheduled to release fourth-quarter 2020 results on Feb 23, after market close.

The company surpassed estimates thrice and missed once in the last four quarters, the positive earnings surprise being 12.29%, on average. Its third-quarter 2020 earnings of 50 cents per share surpassed the Zacks Consensus Estimate of 44 cents by 13.64%.

In the past three months, the company’s shares have gained 16% compared with the industry’s growth of 0.8%.

Factors at Play

Flowserve is anticipated to have benefited from its strong product offerings and signs of recovery in its end markets. Also, the company’s strong backlog conversion capability coupled with solid backlog level, which was $2 billion at the end of the previous quarter, is likely to have been beneficial in the fourth quarter.

Moreover, in the quarter, the company’s multi-year Flowserve 2.0 strategy is likely to have helped it in capturing more margin enhancement opportunities with efficient cost management and higher productivity. Notably, for the fourth quarter of 2020, the company anticipates higher earnings, revenues and cash flow than the previous quarters.

In addition, some of Flowserve’s actions in response to the coronavirus crisis, including the reduction of discretionary expenses and the re-prioritization of its capital expenditure, are likely to have helped it maintain a solid margin in the to-be-reported quarter. For 2020, the company anticipates achieving cost savings of $100 million.

On the flip side, the pandemic is likely to have adversely impacted the demand for the company’s products and services in many of its end markets. Notably, lower bookings in both aftermarket and original equipment businesses are likely to get reflected in Flowserve’s fourth-quarter results. Further, its realignment plan has been fuelling expenses and adversely impacting profitability over the past few quarters — a trend which might have continued in the fourth quarter as well.

The Zacks Consensus Estimate for fourth-quarter revenues from the Flow Control Division segment is currently pegged at $271 million, indicating growth of 6.3% from the previous quarter reported number. The consensus estimate for revenues from the Pump Division segment is pegged at $686 million, indicating growth of 2.4% from the previous quarter’s reported figure.

Earnings Whispers

According to our quantitative model, a stock needs to have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or at least 3 (Hold) to increase the odds of an earnings beat. But that is not the case here as we will see below.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Flowserve has an Earnings ESP of -5.28% as the Most Accurate Estimate is currently pegged at 53 cents, lower than the Zacks Consensus Estimate of 55 cents.

Flowserve Corporation Price and EPS Surprise

Flowserve Corporation Price and EPS Surprise

Flowserve Corporation price-eps-surprise | Flowserve Corporation Quote

Zacks Rank: It carries a Zacks Rank #3.

Key Picks

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Axon Enterprise, Inc (AXON - Free Report) has an Earnings ESP of +3.86% and a Zacks Rank #2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ingersoll Rand Inc. (IR - Free Report) presently has a Zacks Rank #2 and an Earnings ESP of +0.88%.

The Middleby Corporation (MIDD - Free Report) currently has a Zacks Rank #2 and an Earnings ESP of +6.20%.

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