Flowserve (FLS)
NYSEIndustrialsIndustrial - MachinerySnapshot 2026-09-09
$75.19-2.33%
Close 2026-09-09 · 1-day change
NYSEIndustrialsIndustrial - MachinerySnapshot 2026-09-09
Broken: Primary pillar broken — Adjusted operating margin near 15.1% in Q1 2026 and improving: 13.0% vs 15.1% target.
Flowserve improves profit margins by about 8.6 points since 2022. It aims for adjusted EPS of $4.00 to $4.20 in 2026. The recent $490M acquisition boosts growth potential. Operational improvements support steady earnings growth.
Margins may weaken due to Starboard's pressure and recent guidance cuts. Revenue fell 6.7% year-over-year in Q1 2026. The company faces a stormy market and volatile management. These risks could hurt earnings and share price.
The price is about 19% below our fair value near $89, reflecting concerns after the guidance cut and selloff. Our fair value aligns with the Street median, but the market prices in slower growth and margin risks.
Breaks if: adjusted EPS falls below $3.64 (2025 actual)
Maintain and update full-year 2026 adjusted earnings per share guidance reflecting strong earnings performance and confidence in margin expansion.
This is not a price target or investment advice.
A long-form read on the 1–3 year hold thesis. It updates when the weekly evidence changes.
This investment represents a durable compounder with a focus on operational excellence. The current thesis state is intact, supported by recent strong financial performance and management's commitment to margin improvement.
The market currently prices FLS as cheap compared to its peers, with a notable expectations gap. This suggests that investors are not fully accounting for the company's recent operational improvements and strong earnings guidance.
Management is on track with its priorities, including margin improvement and disciplined capital expenditures. However, there is an elevated risk due to the potential for earnings guidance cuts, which could negatively impact sentiment.
The thesis hinges on the performance of sector bellwethers like GEV, PH, and TT. Positive earnings and guidance from these companies could support FLS, while misses or lower guidance could create headwinds.
The most important moves since the prior daily snapshot.
Mixed, the news cuts both ways. The latest earnings beat supports the thesis. However, the company trimmed its full-year growth outlook, which poses a challenge.
as of 2026-09-09
Review the evidence to watch, what would become a concern, and what would make it less concerning.
Not investment advice. Scores describe historical and current data; they are not forecasts of future returns. Consult a licensed advisor before making investment decisions.
Stated as a priority in 3 of last 3 quarters. Management initiated 2026 adjusted EPS guidance at $4.00 to $4.20 in 2025-Q4, reaffirmed it in 2026-Q1, and raised the low end to $4.05 in 2026-Q2. This reflects confidence in earnings growth and margin expansion, consistent with the financial results showing adjusted EPS of $0.85 in 2026-Q1 and $0.95 in 2026-Q2.
“Raised the low end of adjusted EPS guidance to $4.05 to $4.20”
“Reaffirmed full-year 2026 adjusted EPS guidance of $4.00 to $4.20”
“Initiated full year 2026 guidance including adjusted EPS of $4.00 to $4.20”
Breaks if: adjusted operating margin falls below 12.8% (2025-Q1 level)
Continue expanding adjusted operating margin and operational improvements through the Flowserve Business System and realignment programs.
Stated as a priority in 4 of last 4 quarters. Adjusted operating margin expanded from 14.6% in 2025-Q2 to 15.3% in 2026-Q2, marking 14 consecutive quarters of year-over-year adjusted gross margin expansion. Management has consistently emphasized operational excellence and margin improvement, and the financial results show delivering progress on this priority.
“14th consecutive quarter of year-over-year adjusted gross margin expansion, reflecting durable progress”
“Strong margin and earnings expansion in the first quarter, with adjusted operating margin expanded 230 basis points”
“Reaffirms 2026 guidance including adjusted operating margin expansion and double-digit adjusted EPS growth”
“Reached our 2027 adjusted operating margin target two years ahead of schedule”
Breaks if: capex falls below $90M
Breaks if: annual revenue falls below $3.0B
In the next 1 to 3 years, FLS's performance will depend on both its execution and the broader industrial sector's health. Not investment advice.