On Wednesday, Citi maintained a Buy rating on Flowserve Corp . (NYSE: NYSE:FLS) and increased the stock price target to $59 from $56. The adjustment follows Flowserve's announcement of robust bookings and a substantial backlog, which is expected to offer clear visibility into the company's performance through approximately 2024.
Flowserve, a provider of industrial and environmental machinery, reported an estimated future book-to-bill ratio above 1.0x and a backlog nearing $2.6 billion. These figures suggest a stable demand for the company's products and services moving forward.
The firm is anticipated to continue witnessing good project activity across most of its end markets, attributed to ongoing investments in the Middle East, emerging opportunities in the European Union, and an improved outlook in the Power sector.
The financial institution noted that despite geopolitical tensions being a factor to monitor, the overall market demand remains robust. Moreover, Flowserve's improving free cash flow (FCF) generation and operational execution are expected to contribute to a strong performance in 2024.
This positions the company well to achieve its 2027 financial goals, which include reaching $5 billion in revenue, an adjusted operating margin between 14%-16%, and adjusted earnings per share (EPS) of more than $4.00.
The positive outlook for Flowserve is supported by the company's ability to capitalize on favorable market trends and its strategic initiatives aimed at enhancing financial performance. The price target increase reflects confidence in Flowserve's future growth and profitability prospects.
InvestingPro Insights
Flowserve Corp. (NYSE: FLS) presents a compelling case for investors, with recent activity on InvestingPro highlighting several key metrics. The company boasts a market capitalization of $6.21 billion and has shown a notable revenue growth of 17.31% over the last twelve months as of Q1 2024. This growth is a testament to the company's strong market demand and operational efficiency.
InvestingPro Tips indicate that Flowserve has maintained dividend payments for 18 consecutive years, a sign of its financial stability and commitment to shareholder returns. The company's liquid assets also exceed short-term obligations, providing financial flexibility.
Moreover, with a P/E ratio of 26.67 and an adjusted P/E ratio for the last twelve months of 21.63, investors should be aware that the stock is trading at a high valuation relative to near-term earnings growth. Yet, the stock's low price volatility could appeal to those looking for stable investment options.
For investors seeking a more in-depth analysis, there are additional InvestingPro Tips available for Flowserve, which can be accessed by visiting: https://www.investing.com/pro/FLS. To further enhance your investment research, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking even more valuable insights.
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