How Did Flowserve Beat Its Revenue Estimate in 1Q16?
Flowserve Surged Anyway: Reinterpreting FLS's 1Q16 Earnings
Flowserve’s 1Q16 revenue at a glance
Flowserve Corporation’s (FLS) 1Q16 revenues stood $947.2 million, nearly 7.6% higher than the market consensus of $880 million. This was on account of improved short-term demand. The company’s Engineered Product division original equipment sales rose by 17%.
But FLS’s management has given guidance of a 7%–14% decline in sales for 2016 on the back of global economic uncertainties impacting demand for large projects in the chemicals and oil and gas industries. This will affect FLS’s order book and revenues. The company’s original equipment sales fell by 12% and 8% in its Industrial and Flow Control segments, respectively.
Flowserve’s 1Q16 revenue compared to peers
FLS’s peers are Cameron International (CAM), Emerson Electric (EMR), and Pentair (PNR). CAM’s 1Q16 expected revenues stand at ~$1.8 billion, 22.7% lower than the ~$2.8 billion it saw in 1Q15. EMR’s 1Q16 revenues stood at ~$4.7 billion, which is 15.5% lower than the ~$5.6 billion it saw in 1Q15. PNR’s 1Q16 revenues stood at ~$1.6 billion, which represents a 6.8% rise over the ~$1.5 billion it posted in 1Q15.
As of April 29, 2016, FLS has declined by 13.8% YoY (year-over-year), as compared to the 2.1% decrease seen in the broad-based S&P 500 Index (SPY). YTD (year-to-date) as of April 29, FLS has risen by 17.9%.
Now let’s look at FLS’s segmental performance.
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