Flowserve Corporation FLS is well-poised to benefit, driven by its solid product portfolio, strong backlog level and investments in enhancing organic growth.
The company currently carries a Zacks Rank #2 (Buy).
Shares of Flowserve have gained 23.7%, outperforming the industry’s growth of 17.5% in the past three months. Meanwhile, the S&P 500 Index has rallied 11.7% in the same timeframe.
Below we discussed why it is worth investing in the company.
Multiple Tailwinds: Though the coronavirus outbreak-led uncertainties are concerning, Flowserve’s solid backlog will likely prove to be beneficial in the quarters ahead. For instance, exiting first-quarter 2020, its backlog stood at $2.18 billion, reflecting an increase of 1.2% on a sequential basis. Also, the company primarily invests funds in enhancing organic growth and Flowserve 2.0, a multi-year transformation program. Notably, Flowserve 2.0 is likely to improve the company's ability to effectively support customers and drive significant long-term value for shareholders.
Liquidity Position: The company’s solid liquidity position allows it to cover its immediate liabilities. Notably, at the end of the first quarter, it had available liquidity of more than $1.3 billion, comprising of cash and cash equivalents of about $622 million, and $721 million of available capacity under its revolving credit facility. Also, some of the company’s actions, including the reduction of discretionary expenses and the re-prioritization of capital expenditure, will likely help it to maintain a healthy margin performance amid the coronavirus crisis.
In addition, it remains committed toward rewarding shareholders handsomely. Notably, in the first quarter, it paid out dividends of $26 million and repurchased shares worth $32.1 million.
Estimate Trend: In the past 60 days, analysts have increasingly become bullish on the company, as evident from upward earnings estimate revisions. Notably, the Zacks Consensus Estimate for its 2020 earnings has trended up from $1.41 to $1.43 on one upward estimate revision against none downward. In addition, over the same timeframe, the consensus estimate for 2021 earnings has trended up from $1.43 to $1.44 on one upward estimate revision against none downward.
Other Key Picks
Some other top-ranked stocks from the same space are Altra Industrial Motion Corp. AIMC, Chart Industries, Inc. GTLS and The Middleby Corporation MIDD. All the companies currently carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Altra Industrial delivered an earnings surprise of 9.78%, on average, in the trailing four quarters.
Chart Industries delivered an earnings surprise of 1.41%, on average, in the trailing four quarters.
Middleby delivered an earnings surprise of 7.54%, on average, in the trailing four quarters.
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Flowserve Corporation (FLS): Free Stock Analysis Report
Chart Industries, Inc. (GTLS): Free Stock Analysis Report
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