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Why Do Analysts Expect Flowserve’s EPS to Fall in 1Q16?



Flowserve’s 1Q16 EPS estimates

Flowserve’s (FLS) 1Q16 EPS (earnings per share) estimate is ~$0.42. That’s 27% lower than its 1Q15 EPS of $0.58. The first quarter is usually subdued for FLS, so analysts’ estimates are usually lower. The lower estimates are also due to the existing slow growth environment and the ongoing challenges with upstream oil and gas companies due to weak energy prices.

In 1Q16, weak oil prices had an impact on upstream earnings. The cracks and oil spreads have narrowed in 1Q16, further dampening refining margins. Low oil prices have led to reduced investments and higher cancellations, resulting in project delays. In fiscal 2015, FLS had a 36% order booking exposure to the oil and gas sector.

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Earnings per share for peers

Companies operating within FLS’s peer group tend to be robust in their earnings per share forecasts. They include Xylem (XYL), which has managed to beat earnings estimates seven times in the last eight quarters. FLS has beat earnings estimates five times. Emcor Group (EME) and Graco (GGG) have been able to beat earnings estimates four times in the last eight quarters.

For 1Q16, EME, GGG, and XYL expect their 1Q16 EPS to be better than 1Q15. They expect 1Q16 EPS to be $0.75, $0.41, and $0.34, respectively. For the same period last year, EME, GGG, and XYL had EPS of $0.52, $0.65, and $0.33, respectively.


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