Assessing Flowserve (FLS) Valuation After Strong Earnings, Margin Gains, and Upbeat 2025 Guidance

Flowserve (FLS) delivered higher sales and profits than expected in its recent quarterly report, with improved margins helping the company exceed Wall Street’s earnings forecasts. The company also adjusted its 2025 guidance, highlighting future earnings potential.

See our latest analysis for Flowserve.

After starting the year on a hopeful note, Flowserve’s recent surge in sales and profits has not yet translated into share price gains. The stock is down 14.4% year-to-date and has returned -9.9% over the past twelve months (measured by total shareholder return). Although some short-term volatility followed the new earnings update and revised guidance, investors with a longer horizon have still seen their investment more than double over the last three years. This demonstrates that momentum often ebbs and flows around key corporate updates.

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With Flowserve’s recent operational gains and upbeat analyst sentiment, the stock currently trades at a sizeable discount to its price target. Does this signal an overlooked buying opportunity, or is the market already factoring in the company’s improved outlook?

Most Popular Narrative: 26% Undervalued

Flowserve's most widely-followed valuation narrative places fair value at $66.5, well ahead of the last close at $49.09. This points to a significant price gap and raises questions about what the market is missing in its current assessment.

The integration of Flowserve's RedRaven digital monitoring platform into Honeywell's Forge system, combined with increased customer focus on uptime and predictive maintenance, is expected to drive higher penetration of value-added digital solutions. This would expand higher-margin, recurring aftermarket and service revenues that enhance net margins and earnings stability.

Read the complete narrative.

Curious how digital transformation and recurring revenue streams could fuel surprising earnings growth? The narrative's fair value relies on bold jumps in profit margins and a future earnings multiple similar to industry standouts. Which forecasted shifts in Flowserve’s business model are driving this valuation outperformance? The answers might upend your expectations.

Result: Fair Value of $66.5 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, unexpected project delays or continued challenges with integration could threaten margin improvements and stall Flowserve’s promising growth narrative.

Find out about the key risks to this Flowserve narrative.

Build Your Own Flowserve Narrative

If you see things differently or want to dive into the numbers on your own terms, crafting a personalized view takes only a few minutes, so Do it your way.

A great starting point for your Flowserve research is our analysis highlighting 6 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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