We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is Flowserve (FLS) Down 3.3% Since Last Earnings Report?
Read MoreHide Full Article
A month has gone by since the last earnings report for Flowserve (FLS - Free Report) . Shares have lost about 3.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Flowserve due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Flowserve’s first-quarter 2023 adjusted earnings (excluding 20 cents from non-recurring items) of 40 cents per share beat the Zacks Consensus Estimate of 26 cents. Our estimate for first-quarter adjusted earnings was 25 cents. The bottom line increased 471.4% year over year.
Flowserve’s total sales of $980.3 million beat the Zacks Consensus Estimate of $900 million. Our estimate for net sales in the reported quarter was $898.6 million. The top line increased 19.4% year over year. Sales increased 22.3% on a constant-currency basis.
Aftermarket sales in the reported quarter increased 18% year over year (or up 20.7% on a constant-currency basis) to $516.8 million. Original equipment sales totaled $463.5 million, reflecting an increase of 21% (up 24.1% on a constant-currency basis).
Bookings totaled $1.06 billion in the quarter, reflecting a decrease of 2.7% (or 0.5% on a constant-currency basis) from the year-ago quarter. The backlog at the end of the reported quarter was $2.8 billion, up 2.6% on a sequential basis.
Segmental Details
The company currently has two reportable segments — Flowserve Pump Division and Flow Control Division. A brief discussion of the segments is provided below:
Revenues from the Flowserve Pump Division were $700.1 million, up 21.6% year over year. Our estimate for segmental revenues was $625.3 million. Bookings declined 8.4% to $728.5 million.
Revenues from the Flow Control Division were $281.6 million, up 13.6% year over year. Our estimate for segmental revenues was $273.3 million. Bookings of $332.0 million increased 12.8%.
Margin Profile
In the first quarter, Flowserve’s cost of sales increased 11.8% year over year to $683.5 million. It represented 69.7% of sales compared with 74.5% in the year-ago quarter. Gross profit increased 41.6% to $296.8 million, and margin increased 480 basis points (bps) to 30.3%. Selling, general and administrative expenses were $244.3 million, up 18.5% year over year. It represented 24.9% of sales.
Operating income in the quarter increased 676.3% year over year to $57.2 million. The adjusted operating margin increased to 8.3% from 3.3% in the year-ago quarter. The effective tax rate was 15.2% in the quarter.
Balance Sheet and Cash Flow
Exiting the first quarter, Flowserve had cash and cash equivalents of $404.7 million compared with $435 million at the end of December 2022. Long-term debt (due after one year) was $1,209.2 million, compared with $1,224.2 million at the end of December 2022.
In the first three months of 2023, the company generated net cash of $26.6 million from operating activities against $26.8 million used in the year-ago period. Capital expenditure in the period totaled $15.3 million, up 9% from the year ago.
During the first three months of 2023, the company used $26.2 million for distributing dividends. Flowserve did not buy back shares during the period.
Outlook
Flowserve expects a 10.0-12.0%year-over-year increase in revenues in 2023 compared with 9-11% predicted before. The company anticipates reported earnings per share of $1.40-$1.65 and adjusted earnings per share of $1.65-$1.85 for the year compared with $1.50-$1.75 expected earlier. The adjusted tax rate is anticipated to be 18. The company expects net interest expense of $55-$60 million and capital expenditure of $75-$85 million for the year.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 5.06% due to these changes.
VGM Scores
Currently, Flowserve has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Flowserve has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Flowserve (FLS) Down 3.3% Since Last Earnings Report?
A month has gone by since the last earnings report for Flowserve (FLS - Free Report) . Shares have lost about 3.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Flowserve due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Flowserve Q1 Earnings & Revenues Beat, Increase Y/Y
Flowserve’s first-quarter 2023 adjusted earnings (excluding 20 cents from non-recurring items) of 40 cents per share beat the Zacks Consensus Estimate of 26 cents. Our estimate for first-quarter adjusted earnings was 25 cents. The bottom line increased 471.4% year over year.
Flowserve’s total sales of $980.3 million beat the Zacks Consensus Estimate of $900 million. Our estimate for net sales in the reported quarter was $898.6 million. The top line increased 19.4% year over year. Sales increased 22.3% on a constant-currency basis.
Aftermarket sales in the reported quarter increased 18% year over year (or up 20.7% on a constant-currency basis) to $516.8 million. Original equipment sales totaled $463.5 million, reflecting an increase of 21% (up 24.1% on a constant-currency basis).
Bookings totaled $1.06 billion in the quarter, reflecting a decrease of 2.7% (or 0.5% on a constant-currency basis) from the year-ago quarter. The backlog at the end of the reported quarter was $2.8 billion, up 2.6% on a sequential basis.
Segmental Details
The company currently has two reportable segments — Flowserve Pump Division and Flow Control Division. A brief discussion of the segments is provided below:
Revenues from the Flowserve Pump Division were $700.1 million, up 21.6% year over year. Our estimate for segmental revenues was $625.3 million. Bookings declined 8.4% to $728.5 million.
Revenues from the Flow Control Division were $281.6 million, up 13.6% year over year. Our estimate for segmental revenues was $273.3 million. Bookings of $332.0 million increased 12.8%.
Margin Profile
In the first quarter, Flowserve’s cost of sales increased 11.8% year over year to $683.5 million. It represented 69.7% of sales compared with 74.5% in the year-ago quarter. Gross profit increased 41.6% to $296.8 million, and margin increased 480 basis points (bps) to 30.3%. Selling, general and administrative expenses were $244.3 million, up 18.5% year over year. It represented 24.9% of sales.
Operating income in the quarter increased 676.3% year over year to $57.2 million. The adjusted operating margin increased to 8.3% from 3.3% in the year-ago quarter. The effective tax rate was 15.2% in the quarter.
Balance Sheet and Cash Flow
Exiting the first quarter, Flowserve had cash and cash equivalents of $404.7 million compared with $435 million at the end of December 2022. Long-term debt (due after one year) was $1,209.2 million, compared with $1,224.2 million at the end of December 2022.
In the first three months of 2023, the company generated net cash of $26.6 million from operating activities against $26.8 million used in the year-ago period. Capital expenditure in the period totaled $15.3 million, up 9% from the year ago.
During the first three months of 2023, the company used $26.2 million for distributing dividends. Flowserve did not buy back shares during the period.
Outlook
Flowserve expects a 10.0-12.0%year-over-year increase in revenues in 2023 compared with 9-11% predicted before. The company anticipates reported earnings per share of $1.40-$1.65 and adjusted earnings per share of $1.65-$1.85 for the year compared with $1.50-$1.75 expected earlier. The adjusted tax rate is anticipated to be 18. The company expects net interest expense of $55-$60 million and capital expenditure of $75-$85 million for the year.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 5.06% due to these changes.
VGM Scores
Currently, Flowserve has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Flowserve has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.