Assessing Flowserve’s Valuation After Strong Multi Year Share Price Gains

How Has Flowserve Performed Recently?

Before diving into what Flowserve might be worth today, it helps to anchor that discussion in how the stock has actually behaved in the market over different time frames.

Over the past week, Flowserve has delivered a modest 1.0% gain, adding a touch of momentum to a stock that has already climbed 3.1% over the last month. Zooming out further, the share price has advanced 25.6% year to date and 20.3% over the past year, while its 3 year and 5 year returns of 156.4% and 116.0% respectively underline a much stronger long term trend than short term price noise might suggest.

Those multi year returns reflect a period in which industrial and infrastructure related names have generally benefited from higher capital spending and renewed attention on energy, water and process efficiency. At the same time, Flowserve has been steadily positioning itself to capture service, aftermarket and modernization demand in sectors like oil and gas, chemicals, and power generation, which can support more resilient revenue even when new project cycles slow.

Because the stock has already rerated meaningfully from its lows, recent gains naturally raise the question of whether investors are now paying up for that quality and exposure, or if the market is still underestimating Flowserve's long term cash generation. To answer that, the next sections will walk through several valuation lenses, comparing the current price to fundamentals, peers and cash flow potential. The discussion will then circle back at the end to a more narrative driven way of thinking about value that many investors overlook.

Flowserve delivered 20.3% returns over the last year. See how this stacks up to the rest of the Machinery industry.

Approach 1: Flowserve Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company is worth by projecting the cash it can generate in the future and then discounting those cash flows back to today's dollars. For Flowserve, the model starts with last twelve month Free Cash Flow of about $625.1 Million and uses analyst forecasts for the next several years, with 2026 Free Cash Flow projected at roughly $517.4 Million and stepping up to $610.9 Million by 2029. Beyond that, Simply Wall St extrapolates more moderate growth, reaching an estimated $759.6 Million by 2035 as the business matures.

When all those future cash flows are discounted back using a 2 Stage Free Cash Flow to Equity framework, the resulting intrinsic value is about $80.40 per share. Compared with the current share price, this implies Flowserve trades at roughly a 10.4% discount. This suggests the market is not fully pricing in its future cash generation in dollar terms.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Flowserve is undervalued by 10.4%. Track this in your watchlist or portfolio, or discover 906 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Flowserve.

Approach 2: Flowserve Price vs Earnings

For a consistently profitable business like Flowserve, the Price to Earnings, or PE, ratio is a useful way to check whether investors are paying a sensible price for each dollar of current earnings. In general, companies with stronger growth prospects and lower perceived risk can justify a higher PE, while slower growing or riskier firms usually deserve a lower multiple.

Flowserve currently trades on a PE of about 20.2x, which sits below both the broader Machinery industry average of around 25.5x and the peer group average of roughly 34.0x. To go a step further than simple comparisons, Simply Wall St calculates a proprietary “Fair Ratio” of 25.6x for Flowserve, which represents the PE you might expect given its earnings growth outlook, profitability, industry, market cap and specific risk profile.

This Fair Ratio framework is more tailored than a basic peer or industry check, because it adjusts for how Flowserve’s fundamentals and risks differ from other companies rather than assuming they all deserve the same multiple. Comparing the current 20.2x PE to the 25.6x Fair Ratio suggests the market is still applying a discount to what the company arguably deserves based on its characteristics.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1442 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Flowserve Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simply your own story about a company, tied directly to the numbers you believe in, like future revenue, earnings, margins, and fair value. On Simply Wall St, Narratives live in the Community page and give you an easy, accessible way to link Flowserve’s business story, for example nuclear momentum and execution risk, to a concrete financial forecast and then to a Fair Value you can compare against today’s Price to decide whether it looks like a buy, hold, or sell. Because Narratives are dynamic, they automatically update when new information lands, such as earnings results, guidance changes, or major news, so your view stays current without you rebuilding a model from scratch. For Flowserve, one investor might build a more optimistic Narrative aligned with a higher fair value around $76.80, assuming strong nuclear bookings and margin expansion, while another might lean cautious with a fair value closer to $60.00, emphasizing project delays, integration risk, and tougher pricing, and both perspectives are made explicit and comparable through their Narrative forecasts.

Do you think there's more to the story for Flowserve? Head over to our Community to see what others are saying!

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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