Trade-Ideas LLC identified

Flowserve

(

FLS

) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Flowserve as such a stock due to the following factors:

  • FLS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $74.1 million.
  • FLS has traded 814,001 shares today.
  • FLS traded in a range 227.5% of the normal price range with a price range of $2.62.
  • FLS traded above its daily resistance level (quality: 18 days, meaning that the stock is crossing a resistance level set by the last 18 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on FLS:

Flowserve Corporation designs, manufactures, distributes, and services industrial flow management equipment worldwide. The company operates through three segments: Engineered Product Division (EPD), Industrial Product Division (IPD), and Flow Control Division (FCD). The stock currently has a dividend yield of 1.8%. FLS has a PE ratio of 14. Currently there are 6 analysts that rate Flowserve a buy, 1 analyst rates it a sell, and 9 rate it a hold.

The average volume for Flowserve has been 1.4 million shares per day over the past 30 days. Flowserve has a market cap of $5.4 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.48 and a short float of 4.9% with 3.43 days to cover. Shares are down 30.6% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Flowserve as a

hold

. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.

Highlights from the ratings report include:

  • Net operating cash flow has significantly increased by 51.59% to $111.27 million when compared to the same quarter last year. In addition, FLOWSERVE CORP has also vastly surpassed the industry average cash flow growth rate of -14.38%.
  • The debt-to-equity ratio is somewhat low, currently at 0.96, 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 0.99 is somewhat weak and could be cause for future problems.
  • 36.40% is the gross profit margin for FLOWSERVE CORP which we consider to be strong. Regardless of FLS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 6.45% trails the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 42.69%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 37.77% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Machinery industry. The net income has significantly decreased by 39.3% when compared to the same quarter one year ago, falling from $123.51 million to $75.01 million.

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