Management reports that the company is on target to achieve a 10% increase in production and net proved reserves in 2008, in addition to being in an excellent financial position as they anticipate more cash from operations than will be spent on capital expenditures in 2008. Powered by its strong earnings growth of 126% and other important driving factors, this stock's price has surged 41.8% over the past year, and we feel that the stock could move higher despite having already enjoyed nice gains.
We feel that Berry's strengths outweigh the fact that the company has had a somewhat disappointing return on equity. However, it is important to remember that any stock can fall in a major bear market.
Flowserve(FLS Quote - Cramer on FLS - Stock Picks) engages in the development, manufacture, and sale of precision-engineered flow equipments through three divisions: Flowserve Pump, Flow Control and Flow Solutions. The company operates worldwide in more than 56 countries, with 43% of its revenue coming from North America.
We have rated Flowserve a buy since January 2007 on the basis of several positive investment measures, such as the company's increasing revenue and net income. Additionally, the company reported record results in various areas including earnings per share (EPS), sales and bookings for the first quarter of fiscal 2008.
Flowserve's revenue rose 23.6% year over year in the first quarter, largely because of strong sales in the oil and gas markets. The company also reported that fully diluted earnings per share improved 159%, rising from 59 cents a year ago to $1.53. Furthermore, net income increased 162%, rising from $33.61 million to $88.07 million. Additionally, bookings were up 31% for the quarter.
Management raised its fiscal 2008 EPS forecast to a target range of $5.90 to $6.20 from its previous estimate of $5.10 to $5.40. The company is encouraged by its first-quarter results and its continued strength in key markets, and it remains confident in its ability to successfully carry out its operational excellence initiatives to increase its performance in the current global environment. Bear in mind, however, that the recent surge in commodity costs is a challenge to the machinery industry as a whole and could therefore affect Flowserve's results in the future.
Our quantitative rating is based on a variety of historical fundamental and pricing data and represents our opinion of a stock's risk-adjusted performance relative to other stocks.
However, the rating does not incorporate all of the factors that can alter a stock's performance. For example, it doesn't always factor in recent corporate or industry events that could affect the stock price, nor does it include recent technology developments and competitive dynamics that may affect the company.
TheStreet.com Ratings Staff
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