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Flowserve Corporation (FLS - Free Report) is gaining from record levels of booking driven by strong maintenance, repair, operations, and aftermarket (MRO) activity. Solid booking levels highlight the strength across FLS’ end markets. The company’s Diversify, Decarbonize and Digitize strategy also supports its strong booking levels. Flowserve’s fourth-quarter bookings of $1.04 billion marked the eighth consecutive quarter of more than $1 billion bookings.
Increased revenues in the original equipment and aftermarket business are aiding both the Flowserve Pump Division (revenues up 12.6% year over year in the fourth quarter of 2023) and Flow Control Division (revenues up 11.3% year over year in the fourth quarter of 2023) segments. For 2024, Flowserve expects revenues to increase 4-6% year over year. Adjusted earnings per share are estimated to be between $2.40 and $2.60, representing a year-over-year increase of 19.1% at the midpoint.
Flowserve is also benefiting from solid operational execution, pricing actions and improving supply chains. For instance, in 2023, Flowserve’s gross margin increased 70 basis points and 160 basis points year over year in the Flowserve Pump Division and Flow Control Division segments, respectively. Cost-control actions are expected to drive the company’s bottom line.
The company continues to increase shareholders’ value through dividend payments. Flowserve paid out dividends worth $105 million in 2023. Also, in 2022, Flowserve rewarded its shareholders with dividends worth $104.5 million.
However, escalating costs and expenses have been a concern for the company over time. In 2023, Flowserve’s cost of sales jumped 16.1% year over year due to higher input costs. Selling, general and administrative expenses also increased 17.9% in the same period due to higher broad-based annual incentive compensation.
Flowserve’s international presence keeps the company exposed to the risk of adverse currency fluctuations. This is because a strengthening U.S. dollar is likely to require the company to either raise prices or contract profit margins in locations outside the United States. Thus, adverse currency movements are a worry for FLS.
In the past year, shares of this current Zacks Rank #3 (Hold) company have increased 21.9% compared with the industry’s 23.7% growth.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
AIT’s earnings estimates have increased 1.7% for fiscal 2024 in the past 60 days. Shares of Applied Industrial have risen 32.8% in the past year.
AZZ Inc. (AZZ - Free Report) currently carries a Zacks Rank of 2. The company delivered a trailing four-quarter earnings surprise of 37.5%, on average.
In the past 60 days, estimates for AZZ’s earnings have increased 5.4% for fiscal 2024. The stock has soared 79.6% in the past year.
Brady Corporation (BRC - Free Report) presently carries a Zacks Rank of 2. BRC’s earnings surprise in the last four quarters was 6.3%, on average.
In the past 60 days, estimates for Brady’s fiscal 2024 earnings have remained steady. The stock has gained 5.8% in the past year.
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Solid Booking Level Benefits Flowserve (FLS) Amid Cost Woes
Flowserve Corporation (FLS - Free Report) is gaining from record levels of booking driven by strong maintenance, repair, operations, and aftermarket (MRO) activity. Solid booking levels highlight the strength across FLS’ end markets. The company’s Diversify, Decarbonize and Digitize strategy also supports its strong booking levels. Flowserve’s fourth-quarter bookings of $1.04 billion marked the eighth consecutive quarter of more than $1 billion bookings.
Increased revenues in the original equipment and aftermarket business are aiding both the Flowserve Pump Division (revenues up 12.6% year over year in the fourth quarter of 2023) and Flow Control Division (revenues up 11.3% year over year in the fourth quarter of 2023) segments. For 2024, Flowserve expects revenues to increase 4-6% year over year. Adjusted earnings per share are estimated to be between $2.40 and $2.60, representing a year-over-year increase of 19.1% at the midpoint.
Flowserve is also benefiting from solid operational execution, pricing actions and improving supply chains. For instance, in 2023, Flowserve’s gross margin increased 70 basis points and 160 basis points year over year in the Flowserve Pump Division and Flow Control Division segments, respectively. Cost-control actions are expected to drive the company’s bottom line.
The company continues to increase shareholders’ value through dividend payments. Flowserve paid out dividends worth $105 million in 2023. Also, in 2022, Flowserve rewarded its shareholders with dividends worth $104.5 million.
However, escalating costs and expenses have been a concern for the company over time. In 2023, Flowserve’s cost of sales jumped 16.1% year over year due to higher input costs. Selling, general and administrative expenses also increased 17.9% in the same period due to higher broad-based annual incentive compensation.
Flowserve’s international presence keeps the company exposed to the risk of adverse currency fluctuations. This is because a strengthening U.S. dollar is likely to require the company to either raise prices or contract profit margins in locations outside the United States. Thus, adverse currency movements are a worry for FLS.
In the past year, shares of this current Zacks Rank #3 (Hold) company have increased 21.9% compared with the industry’s 23.7% growth.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
Applied Industrial Technologies, Inc. (AIT - Free Report) presently carries a Zacks Rank #2 (Buy) and a trailing four-quarter earnings surprise of 10.4%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AIT’s earnings estimates have increased 1.7% for fiscal 2024 in the past 60 days. Shares of Applied Industrial have risen 32.8% in the past year.
AZZ Inc. (AZZ - Free Report) currently carries a Zacks Rank of 2. The company delivered a trailing four-quarter earnings surprise of 37.5%, on average.
In the past 60 days, estimates for AZZ’s earnings have increased 5.4% for fiscal 2024. The stock has soared 79.6% in the past year.
Brady Corporation (BRC - Free Report) presently carries a Zacks Rank of 2. BRC’s earnings surprise in the last four quarters was 6.3%, on average.
In the past 60 days, estimates for Brady’s fiscal 2024 earnings have remained steady. The stock has gained 5.8% in the past year.