The Irving, TX-based company is a manufacturer and aftermarket service provider of flow control systems, such as pumps, valves, seals and components to the process industries.
"We remain cautious for much of the industrial space driven by persistent end market headwinds, limited channel visibility, and deteriorating macro data," the firm said in an analyst note.
Keybanc is concerned these challenges are continuing into 2016 and expects weak demand trends driven by commodity price headwinds to result in limited channel visibility with the potential for further destocking.
Shares of Flowserve are increasing by 0.31% to $37.52 on heavy trading volume in after-hours trading on Wednesday.
About 1.62 million of the company's shares were traded today, compared to its average of 1.14 million shares per day.
Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate FLOWSERVE CORP as a Hold with a ratings score of C+. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 38.57% is the gross profit margin for FLOWSERVE CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 8.53% is above that of the industry average.
- The debt-to-equity ratio is somewhat low, currently at 0.99, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.94 is somewhat weak and could be cause for future problems.
- Despite the weak revenue results, FLS has outperformed against the industry average of 21.8%. Since the same quarter one year prior, revenues slightly dropped by 8.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Machinery industry and the overall market on the basis of return on equity, FLOWSERVE CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- Net operating cash flow has decreased to $112.98 million or 17.81% when compared to the same quarter last year. Despite a decrease in cash flow of 17.81%, FLOWSERVE CORP is in line with the industry average cash flow growth rate of -18.68%.
- You can view the full analysis from the report here: FLS