Is Flowserve Still an Opportunity After 32% Surge on New Energy Expansion News?

• Wondering if Flowserve is still a bargain, or if that ship has sailed? You're not alone. Lots of investors are asking the same question right now.
• The share price has taken off recently, jumping 32% in the past week and delivering a notable 140.2% return over the past three years.
• These moves are not happening in isolation. Recent news around Flowserve’s expansion into new energy markets, along with a series of analyst upgrades, has fueled fresh optimism about the company’s growth outlook.
• Our valuation score comes in at 4 out of 6, meaning Flowserve appears undervalued across several checks. We will break down what goes into this score soon, but stay with us for a closer look, as there may be an even better way to assess value by the time you finish reading.

Flowserve delivered 27.7% 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

The Discounted Cash Flow (DCF) model estimates a company’s intrinsic value by projecting its future cash flows and discounting them back to today’s value. This process offers investors a way to assess if a stock is under- or overvalued relative to its fundamentals.

For Flowserve, the latest annual free cash flow stands at $625 million. Analyst estimates extend for several years, with projected cash flow reaching approximately $610.9 million in 2029. After these initial forecasts, Simply Wall St extrapolates cash flows out to 2035. These projections suggest a steady trend, with 10-year estimates reaching $754 million, all denominated in USD.

By discounting these future values using the 2 Stage Free Cash Flow to Equity model, the DCF approach arrives at an estimated intrinsic value of $80.63 per share. This figure represents a 13.8% discount to the current market price, meaning Flowserve appears undervalued at today’s share price.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Flowserve is undervalued by 13.8%. Track this in your watchlist or portfolio, or discover 841 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 (PE)

The Price-to-Earnings (PE) ratio is a popular way to value profitable companies like Flowserve because it directly connects a company’s share price to its actual earnings, giving investors a familiar and meaningful benchmark for comparison.

However, not all PE ratios are created equal. Higher growth expectations usually justify higher PE ratios, while companies with higher risk profiles or weaker earnings quality often merit a lower PE. This makes context especially important when using the PE ratio to assess value.

Currently, Flowserve trades at a PE multiple of 19.5x. That is below both the industry average of 23.5x and the average across peers, which stands at 32.1x. While comparing with these benchmarks provides some perspective, it does not account for Flowserve’s unique growth outlook, profitability, and risk profile.

This is where Simply Wall St's Fair Ratio comes into play. The Fair Ratio uses proprietary analysis to estimate what a reasonable PE multiple should be for Flowserve, adjusting for its earnings growth, industry positioning, profit margins, market capitalization, and overall risk. This tailored approach offers a more nuanced and investor-focused valuation than a simple industry or peer comparison.

For Flowserve, the Fair Ratio sits at 26.8x. With its actual PE ratio at 19.5x, this suggests that the stock is undervalued on a PE basis even after accounting for its specific fundamentals and market context.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1411 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. A Narrative is your story behind the numbers, a way to express your unique perspective on Flowserve’s future by connecting your assumptions about revenue, earnings, and margins to an estimated fair value.

With Narratives, you link a company’s story, what you believe will drive its success or challenges, to a financial forecast and, ultimately, a fair value. This approach empowers you to move beyond standard ratios and analyst targets, tailoring the investment process to reflect what actually matters to you.

Narratives are easy to build and share within the Simply Wall St Community page, making them accessible to millions of investors at any experience level. They update automatically as new information, like earnings or news, comes in, ensuring your view stays relevant.

By comparing the fair value from your Narrative to the current price, you can quickly decide when Flowserve is a buy, a hold, or a sell, based on your own convictions rather than just market noise. For example, some investors’ Narratives for Flowserve point to a bullish fair value of $76.00 backed by strong nuclear pipeline growth, while the most cautious see only $60.00, reflecting concerns over margin pressure and project delays. This demonstrates how different perspectives might affect investment decisions.

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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