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Flowserve (FLS) to Post Q4 Earnings: Is a Beat in Store?

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Flowserve Corporation FLS is scheduled to release fourth-quarter 2019 results on Feb 17, after market close.

The company topped estimates thrice in the last four quarters and met the same in one, the positive earnings surprise being 7.96%, on average. The company’s third-quarter earnings of 59 cents per share surpassed the Zacks Consensus Estimate of 56 cents by 5.36%.

In the past six months, the company’s shares have gained 15.1% compared with industry’s growth of 22.4%.



Factors at Play

Strength in Flowserve’s chemical market driven by growth in global demand and rising investments in ethylene facilities is likely to have benefited it in the fourth quarter. Also, given its broad technical services offering, the company is likely to have gained from growing opportunities in the thermal solar market. In addition, robust original equipment bookings, which increased 13% in the third quarter from 2018 end, backed by strength in power and chemical markets, are likely to have supplemented its fourth-quarter revenues.

Also, favorable business conditions, particularly in Asia, Middle East and Gulf Coast region are expected to have strengthened its sales. Moreover, the company is undergoing a transformational realignment program to optimize its manufacturing platform and reduce costs. Notably, its focus on improving on-time delivery, reducing backlog, enhancing sales process and further leveraging on the supplier relationships might get reflected in the upcoming results.

The Zacks Consensus Estimate for fourth-quarter revenues from the company’s Flow Control Division segment is currently pegged at $339 million, indicating growth of 4% from the year-ago reported figure.

However, challenging conditions in the oil and gas end markets might have adversely impacted bookings in the fourth quarter. Also, issues like commodity pricing, trade disruption and the geopolitical uncertainties across the globe have caused delays in capital spending, These are likely to have hurt its top-line performance.

What Our Model Unveils

Our proven model shows that Flowserve has the right combination of the two key ingredients to beat earnings. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.

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

This is the case here as you will see below:

Earnings ESP: Flowserve has an Earnings ESP of +3.93% as the Most Accurate Estimate is pegged at 68 cents, higher than the Zacks Consensus Estimate of 65 cents.

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.

Other Key Picks

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

Alarm.com Holdings, Inc. ALRM carries a Zacks Rank #1 and has an Earnings ESP of +1.15%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Nordson Corporation NDSN has an Earnings ESP of +2.10% and a Zacks Rank #2.

Tennant Company (TNC - Free Report) carries a Zacks Rank #3 and has an Earnings ESP of +4.20%.

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