Will Weak End Markets Hurt Flowserve's (FLS) Q3 Earnings?
Zacks Investment Research | Oct 29, 2017 10:27PM ET
We expect Flowserve Corporation (NYSE:FLS) to beat on earnings in third-quarter 2017. The company is scheduled to release its results on Nov 1, after the closing bell.
The company missed earnings by 50% in the last reported quarter. Overall, Flowserve has an average negative surprise of 7.3% for the trailing four quarters, marked by two earnings beats for as many misses.
Let’s see how things are shaping up for this announcement.
Factors to Drive Better-than-Expected Results
Flowserve had a difficult second quarter, as its earnings missed by half, dragged by precipitous top-line decline, owing to macroeconomic volatility and foreign currency headwinds. Since the company did not anticipate any major turnaround in the adverse geopolitical environment and weak end markets, we expect these factors to cast a shadow on the upcoming quarterly results as well.
The company has been witnessing acute weakness across its segments. Flowserve’s Flow Control Division (FCD), which witnessed 13.2% year-over-year decline in revenues in the prior quarter, will likely be weak in the coming results as well, owing in part to lower original equipment sales in the Americas and Africa.The Zacks Consensus Estimate for the FCD segment revenues in the to-be-reported quarter is pegged at $272 million, reflecting dismal contraction of 16% year over year.
Likewise, its Engineered Product Division is projected to decline 9.4% year over year to $424 million in the upcoming results, marred by soft customer original equipment sales in key end markets. Industrial Product Division sales will also likely be hurt by low original equipment sales and we expect the segment sales to go down 11.7% year over year to $188 million.
Flowserve Corporation Price, Consensus and EPS Surprise
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