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Why Flowserve's 2Q16 Results Disappointed Wall Street

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Part 5
Why Flowserve's 2Q16 Results Disappointed Wall Street PART 5 OF 10

Which of FLS’s Segments Outperformed in Terms of Orders in 2Q16?

Flowserve’s orderbook

Flowserve’s (FLS) products such as seals, pumps, and valves are primarily used in the oil and gas sector and the chemical and general industries. Slow growth and a volatile macroeconomic environment are ongoing concerns for the flow control equipment industry as well as for FLS.

Steady demand for products such as pumps, mechanical seals, specialty products, valve automation systems, control valves, and integrated valve controllers have helped FLS to improve its orderbook.

Which of FLS&#8217;s Segments Outperformed in Terms of Orders in 2Q16?

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FLS’s total annualized revenue during 2Q16 came in at $4.1 billion, while the company’s orderbook stood at $2.1 billion. Its orderbook-to-bill ratio is 0.51x.

The orderbook-to-bill ratio is used to analyze the performances and outlooks of individual companies and the sector as a whole. A ratio of above 1 implies that more orders were received than filled, indicating strong demand. A ratio of below 1 implies weak demand.

Analyzing Flowserve’s orderbook by segment

If we analyze the booking and order backlog data of Flowserve’s three segments, that is, the Engineered Product, Industrial Product, and Flow Control segments, we can say that the Industrial Product segment has outperformed.

Which of FLS&#8217;s Segments Outperformed in Terms of Orders in 2Q16?

General Electric (GE), Emcor Group (EME), and Pentair (PNR) are some of FLS’s industrial (XLI) peers. These companies have wide ranges of flow control product portfolios. However, FLS can’t be strictly compared to any other company due to its different product portfolio in various diverse sectors.

General Electric’s, Emcor’s, and Pentair’s orderbook-to-bill ratios are 2.6x, 0.56x, and 0.26x, respectively.

In next article, we’ll have a look at Flowserve’s cash flows.

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