Flowserve Corporation FLS has been benefiting from solid bookings, driven by strong original equipment and aftermarket activity. Solid booking levels highlight strength across the company’s end markets. FLS’ Diversify, Decarbonize and Digitize strategy has also been supporting its growth. Notably, its third-quarter 2024 bookings of $1.2 billion marked the eleventh consecutive quarter of more than $1 billion bookings.

Strength across its original equipment and aftermarket businesses is supporting both the Flowserve 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, the company 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.

Management remains committed to 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 56% compared with the industry’s 30.4% growth.

However, Flowserve has been grappling with escalating costs and expenses over time. 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 are also likely to hurt FLS’ 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. Also, the stock looks more leveraged than the industry. Its long-term debt/capital ratio is currently 0.36, higher than 0.35 of the industry.

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 1.4%.

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 1.8% in the past 60 days.

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RBC Bearings Incorporated (RBC) : Free Stock Analysis Report

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