FLS - Embedded Expectations Analysis - 2019 09 16
Flowserve Corporation (FLS:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) Earnings, with a 23.6x Uniform P/E, implying bullish expectations for the firm. However, management may be concerned about sustaining free cash flow, growth in Asia, and their ability to reduce debt.Specifically, management may be concerned about the sustainability of recent improvements to inventory receivables, free cash flow, and SG&A. Furthermore, they may be concerned about ongoing pricing pressures in pumps and valves, and they may be exaggerating the growth opportunities they see in Asia. Additionally, they may be concerned about ongoing MRO business project delays, and they may be concerned about the impact of slowdowns from their upstream and midstream distribution network. Finally, management may lack confidence in their ability to reduce their long-term debt and improve margins, and they may be concerned about their ability to provide aftermarket support for LNG products.
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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