Is It Too Late to Consider Flowserve After Its Strong Multi Year Share Price Run?

• Wondering if Flowserve is still good value after its big run, or if the easy money has already been made? Here is a breakdown of whether the current price really reflects the underlying business.
• The stock has climbed 22.8% year to date and 19.6% over the last year, while longer term holders have seen gains of 151.8% over three years and 115.8% over five, even with a recent 2.8% pullback over the past week and a 4.9% rise in the last month to around $70.42.
• Part of this move has been fueled by optimism around infrastructure and energy related spending, along with a broader rotation into industrial names that benefit from long cycle projects and service revenues. Investors are increasingly viewing Flowserve as a beneficiary of multi year investment in process industries and decarbonization projects, which has helped re rate the stock.
• On our framework, Flowserve scores a 4/6 on valuation checks, suggesting it screens as undervalued on most but not all metrics. You can see the full breakdown in our valuation score. Next, we will walk through the main valuation approaches behind that score, and then finish with a more holistic way to think about what Flowserve might really be worth.

Flowserve delivered 19.6% 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 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 in $ terms. For Flowserve, the 2 Stage Free Cash Flow to Equity approach starts with last twelve months Free Cash Flow of about $625.1 million, then uses analyst estimates for the next few years and extrapolates further out.

Analysts currently project Free Cash Flow to rise into the mid to high $500 million range by 2027, with Simply Wall St extending those projections to around $759.6 million by 2035. These future cash flows are discounted back to today, reflecting the time value of money and the risks in Flowserve’s business.

Putting all of this together, the model arrives at an intrinsic value of roughly $80.48 per share, which is about 12.5% above the recent market price. On this basis, the DCF suggests Flowserve shares are currently trading at a meaningful discount to their estimated long term cash generation potential.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Flowserve is undervalued by 12.5%. Track this in your watchlist or portfolio, or discover 909 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 profitable, established industrial business like Flowserve, the price to earnings ratio is a useful way to gauge whether investors are paying a reasonable price for each dollar of current earnings. In general, higher growth and lower risk justify a higher PE multiple, while slower growth or more uncertainty should be reflected in a lower, more conservative PE.

Flowserve currently trades on a PE of about 19.8x, which sits below both the US Machinery industry average of roughly 26.2x and the broader peer group average of around 34.6x. Simply Wall St’s Fair Ratio framework refines this comparison by estimating what PE multiple Flowserve should command based on its earnings growth prospects, margins, risk profile, industry positioning and market capitalization.

On this proprietary Fair Ratio measure, Flowserve is assessed at roughly 25.6x, which is notably higher than the current 19.8x market multiple. Because this approach adjusts for company specific drivers rather than relying purely on blunt peer or sector averages, it can give a more tailored view of value. On that basis, the stock appears to be trading at a discount to where it arguably deserves to trade.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1456 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's introduce you to Narratives, a simple way to attach your own story about Flowserve to the numbers such as your fair value, and your assumptions about future revenue, earnings and margins.

A Narrative on Simply Wall St links three pieces together: what you believe is happening in the business, how that flows into a financial forecast, and what fair value that implies for the stock.

These Narratives are easy to create and explore on the Community page, where millions of investors share and refine their views using a consistent framework that turns a story into numbers you can compare.

They can support your buy or sell decisions by setting out your Fair Value and clearly comparing it with today’s Price, and they update dynamically as fresh news, results or guidance change the outlook.

For Flowserve, for example, one investor might build a bullish Narrative around accelerating nuclear bookings and margin expansion that supports a value closer to $76.80, while another might emphasize execution and project risk to justify a more cautious view nearer $60.00.

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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