What Happened?
Shares of flow control equipment manufacturer Flowserve (NYSE: FLS) jumped 29.8% in the afternoon session after the company reported third-quarter results that featured a significant earnings beat, raised its full-year profit forecast, and posted a better-than-expected order backlog. Flowserve posted an adjusted earnings per share of $0.90, comfortably surpassing analyst estimates of $0.80. This bottom-line strength came despite revenue of $1.17 billion, which was slightly below Wall Street's expectations. Buoyed by the performance, the company increased its full-year 2025 adjusted earnings per share guidance to a midpoint of $3.45. Investors were also encouraged by the company's robust order book, with its backlog growing 3.8% year over year to $2.9 billion. Furthermore, Flowserve demonstrated impressive cash generation, with its free cash flow margin jumping to 32.8% from 13.6% in the same quarter last year, signaling strong operational efficiency.
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What Is The Market Telling Us
Flowserve’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. But moves this big are rare even for Flowserve and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 8 months ago when the stock dropped 9.8% on the news that the company reported disappointing fourth-quarter results: Its EPS missed significantly, and its revenue fell short of Wall Street's estimates. On the other hand, Flowserve blew past analysts' backlog expectations this quarter. Still, this was a weaker quarter.
Flowserve is up 20.2% since the beginning of the year, and at $69.49 per share, has set a new 52-week high. Investors who bought $1,000 worth of Flowserve’s shares 5 years ago would now be looking at an investment worth $2,420.
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