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Here's Why Flowserve (FLS) Should Grace Your Portfolio Now
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Flowserve Corporation (FLS - Free Report) is thriving on the back of strong booking levels. The company’s consistent measures to reward its shareholders through dividends hold promise.
Let’s delve deeper to unearth the factors that make this Zacks Rank #1 (Strong Buy) company a solid investment option now.
Record Booking Levels: Record booking levels due to strong MRO and aftermarket activity are driving Flowserve’s growth. The strength in MRO and aftermarket activity can be attributed to growth in Flow Control Division and seals businesses. First-quarter 2023 bookings of $1.06 billion marked the company’s fifth consecutive quarter of above $1 billion bookings.
The company’s Diversify, Decarbonize and Digitize strategy also supports FLS’ strong booking levels. Solid booking levels highlight the strength across the company’s end-markets. Flowserve expects the uptrend in bookings to continue throughout 2023. It also expects strong orders to drive growth in 2023.
Strong booking levels have encouraged Flowserve to raise its 2023 guidance. The company expects revenues to increase 10-12% year over year in 2023, compared with 9-11% rise anticipated earlier. Adjusted earnings are estimated to be $1.65-$1.85 per share compared with $1.50-$1.75 anticipated earlier.
Expansion Initiatives: Flowserve believes in acquiring businesses/assets to expand its product offerings. In February 2023, the company inked a deal to acquire Velan Inc. in an all-cash transaction valued at approximately $245 million. The buyout will strengthen Flowserve’s valves portfolio and build upon its existing assets through the addition of Velan’s premier brands, strong heritage and technical expertise in diverse end markets.
The deal is expected to be completed by the end of the third quarter of 2023. Velan will become part of Flowserve’s Flow Control Division segment. FLS expects to achieve annualized cost synergies of at least $20 million from the acquisition by the end of the first year. The transaction is expected to be accretive to Flowserve’s adjusted earnings in the first year.
Rewards to Shareholders: Flowserve is committed to rewarding its shareholders handsomely. In 2022, the company paid out dividends worth $104.5 million to its shareholders. In the first quarter of 2023, FLS paid dividends of $26.2 million.
Northward Estimate Revision: The Zacks Consensus Estimate for Flowserve’s 2023 earnings has been revised upward by 7.7% in the past 60 days.
Price Performance: Primarily due to strong booking levels, shares of Flowserve have gained 19% in the past months, outperforming the industry’s 11% increase.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other top-ranked stocks within the broader Industrial Products sector are as follows:
Ingersoll Rand has an estimated earnings growth rate of 14.8% for the current year. Shares of the company have jumped 51% in a year.
Graco (GGG - Free Report) currently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of 7.9%, on average.
Graco has an estimated earnings growth rate of 16.4% for the current year. Shares of the company have rallied 43.5% in a year.
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Here's Why Flowserve (FLS) Should Grace Your Portfolio Now
Flowserve Corporation (FLS - Free Report) is thriving on the back of strong booking levels. The company’s consistent measures to reward its shareholders through dividends hold promise.
Let’s delve deeper to unearth the factors that make this Zacks Rank #1 (Strong Buy) company a solid investment option now.
Record Booking Levels: Record booking levels due to strong MRO and aftermarket activity are driving Flowserve’s growth. The strength in MRO and aftermarket activity can be attributed to growth in Flow Control Division and seals businesses. First-quarter 2023 bookings of $1.06 billion marked the company’s fifth consecutive quarter of above $1 billion bookings.
The company’s Diversify, Decarbonize and Digitize strategy also supports FLS’ strong booking levels. Solid booking levels highlight the strength across the company’s end-markets. Flowserve expects the uptrend in bookings to continue throughout 2023. It also expects strong orders to drive growth in 2023.
Strong booking levels have encouraged Flowserve to raise its 2023 guidance. The company expects revenues to increase 10-12% year over year in 2023, compared with 9-11% rise anticipated earlier. Adjusted earnings are estimated to be $1.65-$1.85 per share compared with $1.50-$1.75 anticipated earlier.
Expansion Initiatives: Flowserve believes in acquiring businesses/assets to expand its product offerings. In February 2023, the company inked a deal to acquire Velan Inc. in an all-cash transaction valued at approximately $245 million. The buyout will strengthen Flowserve’s valves portfolio and build upon its existing assets through the addition of Velan’s premier brands, strong heritage and technical expertise in diverse end markets.
The deal is expected to be completed by the end of the third quarter of 2023. Velan will become part of Flowserve’s Flow Control Division segment. FLS expects to achieve annualized cost synergies of at least $20 million from the acquisition by the end of the first year. The transaction is expected to be accretive to Flowserve’s adjusted earnings in the first year.
Rewards to Shareholders: Flowserve is committed to rewarding its shareholders handsomely. In 2022, the company paid out dividends worth $104.5 million to its shareholders. In the first quarter of 2023, FLS paid dividends of $26.2 million.
Northward Estimate Revision: The Zacks Consensus Estimate for Flowserve’s 2023 earnings has been revised upward by 7.7% in the past 60 days.
Price Performance: Primarily due to strong booking levels, shares of Flowserve have gained 19% in the past months, outperforming the industry’s 11% increase.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other top-ranked stocks within the broader Industrial Products sector are as follows:
Ingersoll Rand (IR - Free Report) presently sports a Zacks Rank #1. The company delivered a trailing four-quarter earnings surprise of 12.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Ingersoll Rand has an estimated earnings growth rate of 14.8% for the current year. Shares of the company have jumped 51% in a year.
Graco (GGG - Free Report) currently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of 7.9%, on average.
Graco has an estimated earnings growth rate of 16.4% for the current year. Shares of the company have rallied 43.5% in a year.