Flowserve Corp (FLS)

If you watch Fast Money you already know about FLS. This company has had quite a run and still seems to have plenty in it. Their pumps, valves and other systems are used in some of the fastest growing industries in the world, not only that, they are also in a constant need of repair because of their aging systems. The systems are very expensive to replace, so companies are more apt to look into repairing. Industries they serve are oil and gas, power generation, water resources and chemical engineering. With respect to oil and gas they have seen immense growth with underwater pipelines. As the drilling takes place farther out, they need to have a way to get it to land. Also there are more wells drilled as current production rates are having difficulty providing ample need. Power generation has seen amazing growth in China and other countries as they are trying to find a cheaper and less pollutive way to provide energy. Water... More If you watch Fast Money you already know about FLS. This company has had quite a run and still seems to have plenty in it. Their pumps, valves and other systems are used in some of the fastest growing industries in the world, not only that, they are also in a constant need of repair because of their aging systems. The systems are very expensive to replace, so companies are more apt to look into repairing. Industries they serve are oil and gas, power generation, water resources and chemical engineering. With respect to oil and gas they have seen immense growth with underwater pipelines. As the drilling takes place farther out, they need to have a way to get it to land. Also there are more wells drilled as current production rates are having difficulty providing ample need. Power generation has seen amazing growth in China and other countries as they are trying to find a cheaper and less pollutive way to provide energy. Water resources have expanded on islands, increasing the amount of water desalinization plants. General applications such as mining have also provided business.





FLS reported per share earnings for the first quarter at $1.53 as opposed to the Street's views of $.94. This was up 159%. Bookings were up 31% to $1.4 billion. First quarter sales were up 24% or $993 million. Gross margins increased by 1.8%. Operating income was $119 million or 76%. Operating margin was up 3.5% to almost 12% total. Backlog was $2.8 billion up 27% from just a quarter ago. Most of these numbers were all records and looks to do well into the future. Bookings were up 31% and there have been five straight quarters of sales over $1 billion. Expenses decreased 1.8% and they have stated their goal is a decrease of 20% by 2010. They attribute most of this to higher sales and the ability a pricing power.





All of their pump divisions did very well. Their pump division increased bookings by 35%. Most of these bookings were in power generation, water and general industry. They saw earnings from all continents. Original equipment was up 44% and after market surged 19%. Sales were up 34%. Gross profit was up 49%. Margins were up 3.2%. Operating income was up 88%. Operating margin improved by 4%.





The Flow Control Division also did well. Bookings increased 26%. Sales increased 12%. Gross profit increased 14%. Gross margins were up 8 tenths of a point. Operating income increased 19%. Operating margin increased 90 basis points.





The Flow Solutions Divisions increased bookings by 22%. Sales were up 17%. Gross profit increased 15%. Operating income was up 5%. Margins declined in this division.





With this type of growth they were able to increase their outlook for the rest of the year. This increase was from approximately $5.40 to $6.20. This makes it easy to see that this company is firing on all cylinders and with a quarter like that the next quarter looks good to me. Over the last year the only moving average this company has had is straight up. It looks as though this will continue. With this last blowout quarter this stock has already met and exceeded all chart expectations, but I think this stock will continue to go higher on hot money. I believe the stock has at least a 136 on it in the next three months.