Flowserve (FLS) Gains 29% YTD: Will the Momentum Continue?
Shares of Flowserve Corporation FLS have gained 28.5% in the year-to-date period, outperforming the industry’s 10.1% increase. The upside can be linked primarily to record booking levels due to strong maintenance, repair and operations (MRO) and aftermarket activity.
Image Source: Zacks Investment Research
Let’s delve deeper to unearth the factors that are driving this stock’s performance.
Flowserve has recorded bookings of more than $1 billion for six consecutive quarters. In second-quarter 2023, its bookings came in at $1.1 billion. Solid booking levels highlight the strength across the company’s end markets. In the second quarter, bookings increased 20% and 12% in general industries and oil and gas markets, respectively. The same increased in the 2-3% range in power and water. FLS’ Diversify, Decarbonize and Digitize (3D) strategy also supports its strong booking levels.
Solid operational execution, pricing actions and improving supply chains are aiding Flowserve’s margins. In the first six months of 2023, gross margin increased to 30% from 27% in the year-ago period.
Following strong second-quarter performance, Flowserve has raised its 2023 guidance. The company expects revenues to increase 16-18% year over year in 2023 compared with 10-12% rise anticipated earlier. Adjusted earnings are estimated to be between $1.85 and $2.00 compared with $1.65-$1.85 anticipated earlier.
FLS’ commitment to reward its shareholders also drove its shares. In the first half of 2023, the company paid dividends of $52.5 million.
Will the Trend Continue?
Flowserve is expected to continue to thrive on the back of strong MRO and aftermarket activity levels. Signs of uptick in manufacturing activities support the already strong demand across its end market. Cost-control actions are expected to drive the company’s bottom line. FLS expects to achieve run-rate cost savings of $50 million by the end of this year.
Zacks Rank & Other Stocks to Consider
Flowserve currently sports a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks within the broader Industrial Products sector are as follows:
Graham Corporation GHM currently flaunts a Zacks Rank #1. The company pulled off a trailing four-quarter earnings surprise of 243.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
Graham has an estimated earnings growth rate of 400% for the current fiscal year. The stock has rallied 61% so far this year.
Applied Industrial Technologies AIT currently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of 15%, on average.
Applied Industrial has an estimated earnings growth rate of 3.1% for the current fiscal year. The stock has gained 22.6% in the year-to-date period.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Flowserve Corporation (FLS) : Free Stock Analysis Report
Applied Industrial Technologies, Inc. (AIT) : Free Stock Analysis Report
Graham Corporation (GHM) : Free Stock Analysis Report
