Flowserve Corporation (NYSE: FLS) is one of the world's leading providers of fluid motion and control products and services. It produces engineered and industrial pumps, seals and valves, plus a range of related flow management systems. Customers are in the oil and gas, chemical, general industrial, power generation, and water treatment sectors. The firm employs more than 14,000 and operates from offices in nearly sixty countries.
Flowserve pleased investors earlier in the month when it reported Q3 EPS of $1.24 and revenues of $919 million. Analysts
had been expecting 92 cents and $910.7 million. Management also guided FY07 revenues to $3.6-$3.7 billion, versus consensus of $3.65 billion. The company came out of Q3 with a record backlog of $2.3 billion, up 39 percent from the end of 2006. FLS shares popped on the news and then moved into a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the issue with one "strong buy," one "buy," three "holds" and two "sells." Analysts see a 25% growth rate, through the next year. The FLS Price to Sales ratio (1.45), Price to Book ratio (4.32), Sales Growth rate (19.24%) and EPS Growth rate (158.33%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past fifty-two weeks, it has traded between $48.73 and $96.35. A stop-loss of $78.20 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.
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