The strongest driver of Flowserve Corporation’s FLS business at the moment is persistent strength across its Pump Division and Flow Control Division segments. Strength across the company’s original equipment and aftermarket businesses is supporting both the Pump Division (revenues increased 2.1% year over year in the third quarter) and Flow Control Division (revenues grew 6.8% year over year in the third quarter) segments. For 2024, Flowserve projects revenues to grow in the range of 4-6% from the year-ago level. It anticipates adjusted earnings per share to be between $2.60 and $2.75.

The company intends to strengthen and expand its businesses through acquisitions. In October 2024, FLS completed the acquisition of MOGAS Industries. The MOGAS acquisition will augment Flowserve’s existing valve and automation product portfolio and accelerate its 3D growth strategy by significantly boosting its direct mining and mineral extraction exposure. 

Also, 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 expanded Flowserve’s LNG product portfolio and complemented its existing pumps, valves and mechanical seals offering.

Management remains focused on rewarding its shareholders through dividend payouts. In the first nine months of 2024, the company used $82.8 million for distributing dividends and bought back shares worth $20.1 million. Also, it paid dividends of $105 million in 2023. In the first quarter of 2024, Flowserve hiked its quarterly dividend by approximately 5% to 21 cents per share (annually: 84 cents).

FLS’ Price Performance

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In the past year, the Zacks Rank #3 (Hold) company has gained 39.4% compared with the industry’s 9.2% growth.

However, the escalating cost of sales and expenses poses a threat to Flowserve’s bottom line. For instance, in the first nine months of 2024, its cost of sales jumped 4.4% year over year to $2.3 billion due to higher input costs. The metric, as a percentage of net sales, was 68.5%. The company’s cost of sales increased 16.1% year over year in 2023.

High debt levels raise financial obligations and hurt the company’s profitability. It exited the third quarter with long-term debt of $1.17 billion, higher than $1.16 billion reported at the end of fourth-quarter 2023. The company’s interest expense was $49 million in the first nine months of 2024.

Stocks to Consider

Some better-ranked companies are discussed below.

Graham Corporation GHM 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 101.9%. In the past 60 days, the Zacks Consensus Estimate for Graham’s fiscal 2025 earnings has increased 8.4%.

RBC Bearings Incorporated RBC presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter average earnings surprise of 2.5%.

In the past 60 days, the consensus estimate for RBC’s fiscal 2025 earnings has increased 0.5%.

Kadant Inc. KAI presently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 17.2%.

The Zacks Consensus Estimate for KAI’s 2024 earnings has increased 0.8% in the past 60 days.

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RBC Bearings Incorporated (RBC) : Free Stock Analysis Report

Flowserve Corporation (FLS) : Free Stock Analysis Report

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Graham Corporation (GHM) : Free Stock Analysis Report

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