The analyst firm lowered its 2014 EPS estimates for the pump and valve manufacturer to $3.65 a share from its previous estimate of $3.70 a share. Barclays also lowered its 2015 EPS estimates for Flowserve to $3.90 a share from $4.15 a share, and set its 2016 EPS estimates at $4.10 a share.
Analysts Andy Kaplowitz and Vlad Bystricky wrote, "We think the key to FLS' resiliency will be its aftermarket and run-rate businesses, which we expect to hold up reasonably well in the current environment. While FLS is certainly levered to oil and gas markets (~40% of sales), 60% of the company's sales to markets such as chemicals, pharma, food, and even power should provide some offset to what we expect could be more difficult oil and gas markets than we previously expected."
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TheStreet Ratings team rates FLOWSERVE CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate FLOWSERVE CORP (FLS) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its expanding profit margins, growth in earnings per share, largely solid financial position with reasonable debt levels by most measures, notable return on equity and increase in net income. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 37.30% 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 10.67% is above that of the industry average.
- FLOWSERVE CORP's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, FLOWSERVE CORP increased its bottom line by earning $3.42 versus $2.86 in the prior year. This year, the market expects an improvement in earnings ($3.75 versus $3.42).
- The debt-to-equity ratio is somewhat low, currently at 0.61, 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 0.98 is somewhat weak and could be cause for future problems.
- FLS, with its decline in revenue, slightly underperformed the industry average of 2.9%. Since the same quarter one year prior, revenues slightly dropped by 2.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Machinery industry average. The net income increased by 1.8% when compared to the same quarter one year prior, going from $126.27 million to $128.56 million.
- You can view the full analysis from the report here: FLS Ratings Report