FLS - Embedded Expectations Analysis - 2019 08 16
Flowserve Corporation (FLS:USA) currently trades near historical averages relative to UAFRS-based (Uniform) Earnings, with a 24.1x Uniform P/E, implying bullish expectations for the firm. However, management has concerns about maintaining margins, bookings growth, and driving working capital improvements.Specifically, management may lack confidence in their ability to maintain recent gross and operating margin improvements in their Flow Control Division, and they may be concerned about the sustainability of recent bookings growth. Furthermore, they may lack confidence in their ability to drive down costs with their enterprise software, and may appear concerned about their ability to continue driving working capital improvements. Moreover, they may lack confidence in their ability to meet their long-term 2022 targets, and may be concerned about the timing of their price increase schedule. Additionally, they may be concerned about their ability to continue supporting existing Western nuclear facilities, and may be exaggerating their confidence in their ability to execute and run a bigger business. Finally, they may lack confidence in their ability to meet adjusted EPS and capital expenditure targets, and may be concerned about achieving back-half lifts in operating margins going forward.
Flowserve is a manufacturer and aftermarket service provider of flow control systems. The company develops and manufactures flow control equipment integral to the movement, control and protection of the flow of materials in its customers' processes. The company's segments are: Flowserve Pump Division, which are for custom, pumps, pre-configured industrial pumps, pump systems, mechanical seals, auxiliary systems and replacement parts and related services; and Flow Control Division, which are for engineered and industrial valves, control valves, actuators and controls and related services.
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