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Flowserve (FLS) to Report Q1 Earnings: What's in the Offing?

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Flowserve Corporation (FLS - Free Report) is scheduled to release first-quarter 2021 results on May 3, after market close.

The company surpassed and missed estimates twice each in the last four quarters, the positive earnings surprise being 11.00%, on average. Its fourth-quarter 2020 earnings of 53 cents per share missed the Zacks Consensus Estimate of 55 cents by 3.64%.

In the past three months, the company’s shares have gained 12.3% compared with the industry’s growth of 17.5%.

Factors at Play

Flowserve is likely to have gained from its robust backlog level in the first quarter, which was $1.9 billion at the end of the previous quarter. In addition, given its strong product offerings, the company is anticipated to have benefited from the strength in chemical and water management end markets, along with signs of recovery in power generation.

Also, Flowserve’s multi-year Flowserve 2.0 strategy is likely to have enabled it in capturing more margin enhancement opportunities with optimization of its manufacturing platform in the quarter. In addition, its focus on enhancing sales process, along with its supply-chain initiatives, might get reflected in the first-quarter results.

Moreover, in 2020, the company achieved cost savings of $100 million. This trend is likely to have continued in the first quarter of 2021 as well, given its focus on cost saving initiatives. This is likely to have helped it maintain a solid margin performance in the quarter.

However, the coronavirus-led market downturn is likely to have affected the demand for its products and services in several of its end markets. For instance, lower bookings in both aftermarket and original equipment businesses are likely to get reflected in Flowserve’s first-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 to-be-reported quarter as well.

Notably, the Zacks Consensus Estimate for first-quarter revenues from the Flow Control Division segment is currently pegged at $245 million, indicating decline of 15.8% from the previous quarter’s reported number. The consensus estimate for revenues from the Pump Division segment is pegged at $571 million, indicating decline of 18% from the previous quarter’s reported number.

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 -0.71%.

Flowserve Corporation Price and EPS Surprise

Flowserve Corporation Price and EPS Surprise

Flowserve Corporation price-eps-surprise | Flowserve Corporation Quote

Zacks Rank: The company 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 deliver an earnings beat this season:

Emerson Electric Co.  (EMR - Free Report)   has an Earnings ESP of +3.62% and a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Enersys (ENS - Free Report) has an Earnings ESP of +0.78% and a Zacks Rank #3, currently.

Eaton Corporation, plc (ETN - Free Report) has an Earnings ESP of +1.96% and is presently Zacks #3 Ranked.

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Emerson Electric Co. (EMR) - free report >>

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Eaton Corporation, PLC (ETN) - free report >>

Enersys (ENS) - free report >>