Shares of Flowserve Corp. (FLS) hit a 52-week high of $73.89 during yesterday’s trading session. However, the stock closed the session at $73.66, which reflects a solid year-to-date return of 45.4%. The average trading volume for the last three months aggregated 1,041,027 shares.
Despite its strong price appreciation, this Zacks Rank #2 (Buy) stock still has enough potential to drive the stock further. Its strong estimate revisions over the last 60 days and a long-term EPS growth expectation of 12.5% are some of the catalysts driving the stock.
Impressive third-quarter 2013 results that comprised higher sales across its businesses, top-line growth and increased bookings were the primary driving factors for Flowserve.
On Oct 24, Flowserve reported third-quarter net income of $126.3 million or 90 cents per share, up from $106.3 million or 69 cents per share in the year-ago quarter.
The company has been making efforts to enhance internal revenue growth by stabilizing its aftermarket performance, focusing on supply chain and initiatives like ‘One Flowserve’ to improve operational excellence. Furthermore, the company’s ongoing cost-management efforts are adding to the growth. We also remain encouraged by the record top-line growth of the company and expect it to continue its bull run in the coming quarters.
In addition, the company reported higher margins across all its segments in the third quarter. The rise in segment gross margin was primarily driven by significant growth in OE (Original Equipments) bookings, better execution of operational plans and cost-control initiatives.
Flowserve aims to strategically deploy cash on long-term projects that are likely to add to shareholder wealth, including accretive acquisitions.
Over the last 60 days, 7 out of 13 estimates for 2013 have been revised upward while none were revised lower, which led to a 1.5% rise in the Zacks Consensus Estimate to $3.45 per share. For 2014, 6 out of 13 estimates moved upward, advancing the Zacks Consensus Estimate by 2.6% to $3.95 per share.
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