What Analysts Expect of Flowserve in 2016
Flowserve Surged Anyway: Reinterpreting FLS's 1Q16 Earnings
Flowserve’s outlook for 2016
For 2016, analysts expect Flowserve Corporation (FLS) to report revenues of ~$3.9 billion, which would be ~14% lower than its $4.5 billion in 2015. Gross margins and restructurings efforts will play an important role for the company in 2016. Analysts expect FLS to report an adjusted EPS of ~$2.5 for 2016, as compared to $3.0 in 2015.
For 2016, FLS projects its capital expenditure to be in the range of ~$105 million–$115 million. It will look to invest in a strategic alliance for nearly $150 million. FLS plans to reduce its debt by $60 million. Flowserve’s focus is profitable growth with the help of structural changes.
By comparison, Emcor Group (EME) expects its 2016 revenues to grow marginally by 3.1% to $6.9 billion, as compared to $6.7 billion in 2015. The company’s net profit is expected to grow by 6.3% in 2016 YoY (year-over-year).
Graco (GGG) expects both its revenues and net profits to increase by 4.1% and 6.7%, respectively, in 2016. Xylem (XYL) expects its revenues to grow by 1.7% to $3.7 billion, as compared to $3.6 billion in 2015. The company’s net profits are expected to grow by 8.5% in 2016 over 2015.
Stock reaction
FLS has gained by 17.9% YTD (year-to-date) as of April 29, as compared to the ~8.3% increase in the Industrial Select Sector SPDR ETF (XLI) during the same period. As of April 29, FLS has declined by 13.8% YoY, while XLI has risen marginally by 0.2% YoY.
As you can see, Flowserve’s revenue and earnings outlook for 2016 seem suppressed compared to those of peers. But what are analysts recommending for Flowserve?
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