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

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Can Flowserve Beat Analysts' Revenue Estimates Again in 2Q16? PART 1 OF 7

Can Flowserve Beat Analysts’ Revenue Estimates in 2Q16?

Flowserve’s 2Q16 revenue estimates

Flowserve (FLS) will release its 2Q16 earnings on April 29, 2016. Wall Street analysts expect Flowserve’s 2Q16 revenue to be ~$998 million, 14% below its 2Q15 revenue.

In FLS’s 2Q16 results, investors should keep an eye on each of its segments’ original equipment sales and organic revenue growths. Investors should also closely analyze FLS’s gross margins and selling general and administrative expenses.

Can Flowserve Beat Analysts&#8217; Revenue Estimates in 2Q16?

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FLS’s management has indicated that its current upstream oil and gas challenges could be more severe and could last for longer than anticipated. FLS’s strategy to combat this inherent business risk will be watched closely in its 2Q16 results.

Between April 1, 2016, and July 6, 2016, FLS rose by 2.2%, compared to the ~1.6% rise of the Industrial Select Sector SPDR ETF (XLI).

FLS has missed analysts’ estimates for its quarterly revenues in five of the last eight quarters.

Flowserve’s revenue so far

FLS’s 1Q16 revenue was $947.2 million, nearly 7.6% above the market consensus. This was on account of improved execution and short-term demand. The company’s Engineered Product segment’s original equipment sales rose by 17%.

Emcor Group (EME), Graco (GGG), and Xylem (XYL) are some of FLS’s peers operating in the flow management equipment space. However, FLS can’t be strictly compared to any other company due to its diversified product base and revenue stream.

Emcor expects its 2Q16 revenue to be $1.7 billion, a rise of 6.7% compared to 2Q15. Similarly, Graco expects its 2Q16 revenue to be $352 million, 4.9% higher than its 1Q15 revenue. Xylem expects its 2Q16 revenue to be $929 million, 1.0% higher than its 2Q15 revenue.

In the next part, we’ll discuss market expectations for FLS’s earnings per share.

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