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Can Flowserve Beat Analysts' Revenue Estimates Again in 2Q16?

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Part 2
Can Flowserve Beat Analysts' Revenue Estimates Again in 2Q16? PART 2 OF 7

Why Analysts Expect Flowserve’s Earnings to Jump in 2Q16

Flowserve’s 2Q16 EPS estimates

Flowserve’s (FLS) 2Q16 EPS (earnings per share) estimate is ~$0.61, 24% lower compared to its 2Q15 EPS of $0.80. On a sequential basis, however, FLS’s 2Q16 EPS are expected to show robust growth of 56%. Lower selling, general, and administrative (SG&A) expenses, a lack of realignment or other charges, and cost saving measures will boost FLS’s earnings in 2Q16.

Investors should keep in mind that the existing slow growth environment and ongoing challenges for upstream oil and gas (XOP) companies are due to weak energy prices. Oil’s low price has led to reduced investments and higher cancellations, resulting in project delays. Orders are very important for keeping growth momentum in terms of both revenue and earnings.

Why Analysts Expect Flowserve&#8217;s Earnings to Jump in 2Q16

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Flowserve’s earnings so far

FLS’s adjusted EPS (earnings per share) stood at $0.39 in 1Q16, 7.1% below the consensus due to the unfavorable influence of seasonal impact and a rise in SG&A expenses.

Flowserve’s peers’ earning expectations in 2Q16

FLS’s 2Q16 EPS (earnings per share) estimate is ~$0.61, 24% lower than its 2Q15 EPS of $0.80. Companies operating within FLS’s peer group tend to be robust in their EPS forecasts. Emcor (EME) managed to beat earnings estimates six times in the last eight quarters, while FLS beat earnings estimates only three times. Both Xylem (XYL) and Graco (GGG) were able to beat earnings estimates four times in the last eight quarters.

For 2Q16, EME and GGG expect their 2Q16 EPS to be lower than in 2Q15. Their expected 2Q16 EPS will be $0.71 and $1.0, respectively. During the same period last year, EME’s and GGG’s EPS stood at $0.74 and $1.29, respectively. XYL expects its 2Q16 EPS to be $0.47, higher than its 2Q15 EPS of $0.43.

In the next part, we’ll discuss whether robust orders will continue for Flowserve’s Engineered segment in 2Q16.

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