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Reasons Why Investing in Flowserve Stock Seems Prudent Now
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Flowserve Corporation (FLS - Free Report) is benefiting from positive trends in its key end markets and accretive acquisitions. Handsome rewards to shareholders add to the stock’s appeal.
Headquartered in Irving, TX, Flowserve is a leading manufacturer and aftermarket service provider of comprehensive flow control systems globally. It develops and manufactures precision-engineered flow control equipment, such as pumps, valves and seals, for critical service applications that require high reliability.
Shares of FLS have gained 34.1% in a year compared with the industry‘s 33.9% growth. The company currently carries a Zacks Rank #2 (Buy).
Image Source: Zacks Investment Research
Let’s delve into the factors that make this company a smart investment choice at the moment.
Business Strength: Flowserve is poised to gain from strong momentum in the Flowserve Pump Division and Flow Control Division segments. Strength in the aftermarket and original equipment businesses, driven by an increase in demand for products and services in North America, Europe, the Middle East and Latin America, is a prime catalyst for the Flowserve Pumps Division segment’s growth. An increase in original equipment sales in the Middle East, North America, Asia Pacific and Europe regions is supporting the Flow Control Division segment’s performance.
End-Market Strength: FLS is seeing improved customer orders resulting from large project wins in the oil and gas end market. Strength in the chemical end market, driven by the Emerald greenfield petrochemical project in Saudi Arabia, has also been a positive. The company expects significant chemical capacity additions in the Middle East and modest improvement in overall global chemical demand in the quarters ahead. Solid booking level in the power generation market is also driven by the growth in data center capacity and increasing Artificial Intelligence activity.
Accretive Acquisitions: Flowserve is focused on strengthening its competency through acquisitions. In July 2024, it acquired the intellectual property and in-process R&D related to cryogenic liquefied natural gas (LNG) submerged pump technology, systems and packaging from NexGen Cryogenic Solutions Inc. NexGen’s pump and cold energy recovery turbine technology for the liquefaction, shipping and regasification markets will expand FLS’ LNG product portfolio and complement its existing pumps, valves and mechanical seals offering. NexGen’s technology has been added to the Pumps Division segment.
Also, in August 2024, Flowserve inked a deal to acquire MOGAS Industries. The MOGAS acquisition will augment its existing valve and automation product portfolio and accelerate its 3D growth strategy by significantly boosting its direct mining and mineral extraction exposure. The buyout will be integrated into the Flow Control Division segment and will likely improve FLS’ aftermarket potential and generate revenue growth synergies.
Rewards to Shareholders: The company’s measures to reward its shareholders through dividend payments are noteworthy. In the first six months of 2024, it used $55.3 million for distributing dividends and bought back shares worth $16.2 million. Also, Flowserve paid dividends of $105 million in 2023. In the first quarter of 2024, it hiked its quarterly dividend by approximately 5% to 21 cents per share (annually: 84 cents).
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Other top-ranked companies from the same space are discussed below.
GHM delivered a trailing four-quarter average earnings surprise of 133.3%. In the past 60 days, the Zacks Consensus Estimate for Graham’s fiscal 2025 earnings has increased 17.3%.
Crane Company (CR - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 11.2%.
In the past 60 days, the Zacks Consensus Estimate for CR’s 2024 earnings has increased 2%.
Parker-Hannifin Corporation (PH - Free Report) currently carries a Zacks Rank of 2. PH delivered a trailing four-quarter average earnings surprise of 2.6%.
In the past 60 days, the consensus estimate for Parker-Hannifin’s fiscal 2025 earnings has increased 1.3%.
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Reasons Why Investing in Flowserve Stock Seems Prudent Now
Flowserve Corporation (FLS - Free Report) is benefiting from positive trends in its key end markets and accretive acquisitions. Handsome rewards to shareholders add to the stock’s appeal.
Headquartered in Irving, TX, Flowserve is a leading manufacturer and aftermarket service provider of comprehensive flow control systems globally. It develops and manufactures precision-engineered flow control equipment, such as pumps, valves and seals, for critical service applications that require high reliability.
Shares of FLS have gained 34.1% in a year compared with the industry‘s 33.9% growth. The company currently carries a Zacks Rank #2 (Buy).
Image Source: Zacks Investment Research
Let’s delve into the factors that make this company a smart investment choice at the moment.
Business Strength: Flowserve is poised to gain from strong momentum in the Flowserve Pump Division and Flow Control Division segments. Strength in the aftermarket and original equipment businesses, driven by an increase in demand for products and services in North America, Europe, the Middle East and Latin America, is a prime catalyst for the Flowserve Pumps Division segment’s growth. An increase in original equipment sales in the Middle East, North America, Asia Pacific and Europe regions is supporting the Flow Control Division segment’s performance.
End-Market Strength: FLS is seeing improved customer orders resulting from large project wins in the oil and gas end market. Strength in the chemical end market, driven by the Emerald greenfield petrochemical project in Saudi Arabia, has also been a positive. The company expects significant chemical capacity additions in the Middle East and modest improvement in overall global chemical demand in the quarters ahead. Solid booking level in the power generation market is also driven by the growth in data center capacity and increasing Artificial Intelligence activity.
Accretive Acquisitions: Flowserve is focused on strengthening its competency through acquisitions. In July 2024, it acquired the intellectual property and in-process R&D related to cryogenic liquefied natural gas (LNG) submerged pump technology, systems and packaging from NexGen Cryogenic Solutions Inc. NexGen’s pump and cold energy recovery turbine technology for the liquefaction, shipping and regasification markets will expand FLS’ LNG product portfolio and complement its existing pumps, valves and mechanical seals offering. NexGen’s technology has been added to the Pumps Division segment.
Also, in August 2024, Flowserve inked a deal to acquire MOGAS Industries. The MOGAS acquisition will augment its existing valve and automation product portfolio and accelerate its 3D growth strategy by significantly boosting its direct mining and mineral extraction exposure. The buyout will be integrated into the Flow Control Division segment and will likely improve FLS’ aftermarket potential and generate revenue growth synergies.
Rewards to Shareholders: The company’s measures to reward its shareholders through dividend payments are noteworthy. In the first six months of 2024, it used $55.3 million for distributing dividends and bought back shares worth $16.2 million. Also, Flowserve paid dividends of $105 million in 2023. In the first quarter of 2024, it hiked its quarterly dividend by approximately 5% to 21 cents per share (annually: 84 cents).
Other Stocks to Consider
Other top-ranked companies from the same space are discussed below.
Graham Corporation (GHM - Free Report) currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
GHM delivered a trailing four-quarter average earnings surprise of 133.3%. In the past 60 days, the Zacks Consensus Estimate for Graham’s fiscal 2025 earnings has increased 17.3%.
Crane Company (CR - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 11.2%.
In the past 60 days, the Zacks Consensus Estimate for CR’s 2024 earnings has increased 2%.
Parker-Hannifin Corporation (PH - Free Report) currently carries a Zacks Rank of 2. PH delivered a trailing four-quarter average earnings surprise of 2.6%.
In the past 60 days, the consensus estimate for Parker-Hannifin’s fiscal 2025 earnings has increased 1.3%.