Flowserve (FLS): Assessing Valuation After Strong Shareholder Returns and Market Outperformance

Flowserve (FLS) has advanced nearly 1% over the past week, steadily outperforming broader industrial peers this quarter. Investors are watching how the company’s consistent growth and recent performance might influence future results.

See our latest analysis for Flowserve.

Flowserve’s upward momentum this year is hard to miss, with a year-to-date share price return of 20.25% and a stellar 30.29% total shareholder return over the past 12 months. The stock’s recent sharp climb suggests growing investor confidence, likely reflecting both its steady growth and positive outlook in the industrial space.

If the action in industrial names has you looking for new ideas, it could be the perfect time to broaden your perspective and discover fast growing stocks with high insider ownership

But with Flowserve trading just above some analyst targets and strong results already factored in, investors may be wondering if there is still upside left, or if most future growth is already reflected in the stock price.

Most Popular Narrative: 3.7% Overvalued

With Flowserve’s shares recently closing at $68.95, just above the consensus fair value target of $66.50, expectations for continued earnings growth have the stock trading at a premium. The most widely followed narrative digs deep into the strategy and market trends fueling this bold valuation call.

*"Robust growth in demand for flow control solutions in clean energy (hydrogen, carbon capture) and water infrastructure markets, as evidenced by record nuclear project bookings and expanding project funnels, positions Flowserve to capture new revenue streams aligned with global energy transition and water management initiatives, likely supporting multi-year top-line growth. 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, expanding higher-margin, recurring aftermarket and service revenues that enhance net margins and earnings stability."*

Read the complete narrative.

Want a sneak peek at what’s behind these high expectations? One quantitative assumption stands out: a future boost in both recurring revenues and margins is central to this narrative math. Curious which numbers might justify the current valuation premium? Find out what other surprising projections are driving the story.

Result: Fair Value of $66.50 (OVERVALUED)

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

However, ongoing project delays or setbacks in integrating recent acquisitions could create challenges for Flowserve's growth story and may result in more volatile earnings ahead.

Find out about the key risks to this Flowserve narrative.

Another View: What Do the Numbers Really Say?

While the most popular narrative sees Flowserve as slightly overvalued, our DCF model suggests the story might be more optimistic. According to the SWS DCF model, Flowserve is actually trading at a 14% discount to its estimated fair value. Is the market underappreciating long-term cash flows? Or is there a reason for caution?

Look into how the SWS DCF model arrives at its fair value.

Build Your Own Flowserve Narrative

If you think there’s more to Flowserve’s story, or you’d rather dive into the numbers your own way, it takes less than three minutes to build your own perspective. So why not Do it your way

A great starting point for your Flowserve research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

Looking for More Smart Investment Angles?

Don’t leave your next opportunity to chance. The Simply Wall Street Screener puts powerful trends at your fingertips so you can spot high-potential ideas and build your winning portfolio before others catch on.

• Capitalize on resilient cash flow by reviewing these 852 undervalued stocks based on cash flows with standout potential that the crowd may be overlooking.
• Unlock big yield possibilities for steady income through these 21 dividend stocks with yields > 3% featuring robust returns above 3%.
• Tap into the crypto revolution by browsing these 81 cryptocurrency and blockchain stocks at the forefront of blockchain technology and digital assets.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com