Flowserve Faces Pressure from Activist Shareholder Starboard Value
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 days ago
0mins
Source: seekingalpha
- Execution Challenges: Activist shareholder Starboard Value highlighted that Flowserve has underperformed despite strong trends in reindustrialization and energy security, primarily due to poor execution, which has hindered the company's growth potential in a robust industry.
- Margin Target Discrepancy: Starboard emphasized that Flowserve's target operating profit margin of 20% is below the median target of 23% set by its peers, indicating that failure to improve margins could put the company at a competitive disadvantage, impacting future market share.
- Nuclear Energy Opportunities: With 20% of its backlog coming from the nuclear sector, Starboard believes Flowserve has the potential to become the supplier of choice for both traditional utility-scale nuclear plants and the small modular reactors currently being developed, which could significantly enhance its market position.
- Stock Price Decline Impact: Although Flowserve exceeded Q1 earnings expectations, the company has cut its sales forecast for FY 2026, leading to a 13% drop in its stock price since April 29, which poses pressure on future financing and investor confidence.
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Analyst Views on FLS
Wall Street analysts forecast FLS stock price to rise
10 Analyst Rating
7 Buy
3 Hold
0 Sell
Moderate Buy
Current: 75.210
Low
74.00
Averages
80.75
High
85.00
Current: 75.210
Low
74.00
Averages
80.75
High
85.00
About FLS
Flowserve Corporation is a provider of fluid motion and control products and services. The Company produces engineered and industrial pumps, seals and valves as well as a range of related flow management services. Its Flowserve Pumps Division segment designs, manufactures, pretests, distributes and services highly custom-engineered pumps, pre-configured industrial pumps, pump systems, mechanical seals and auxiliary systems (original equipment) and related services. Its products and services are used by companies that operate in the energy, power generation, chemical, and general industries. Its Flowserve Pumps Division segment designs, manufactures, and distributes a portfolio of engineered-to-order and configured-to-order isolation valves, control valves, valve automation products and related equipment. Its products are used to control, direct and manage the flow of liquids, gases and multiphase fluids. It also provides aftermarket products and services for industrial gas turbines.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Flowserve Faces Pressure from Activist Shareholder Starboard Value
- Execution Challenges: Activist shareholder Starboard Value highlighted that Flowserve has underperformed despite strong trends in reindustrialization and energy security, primarily due to poor execution, which has hindered the company's growth potential in a robust industry.
- Margin Target Discrepancy: Starboard emphasized that Flowserve's target operating profit margin of 20% is below the median target of 23% set by its peers, indicating that failure to improve margins could put the company at a competitive disadvantage, impacting future market share.
- Nuclear Energy Opportunities: With 20% of its backlog coming from the nuclear sector, Starboard believes Flowserve has the potential to become the supplier of choice for both traditional utility-scale nuclear plants and the small modular reactors currently being developed, which could significantly enhance its market position.
- Stock Price Decline Impact: Although Flowserve exceeded Q1 earnings expectations, the company has cut its sales forecast for FY 2026, leading to a 13% drop in its stock price since April 29, which poses pressure on future financing and investor confidence.
See More
Oil Price Surge Triggers Market Sell-Off
- Market Reaction: The stock market experienced a widespread sell-off in the afternoon session due to escalating geopolitical tensions related to the Iran conflict, which pushed oil prices higher, causing the 10-year Treasury yield to rise by nine basis points to 4.57%, its highest level in a year, intensifying concerns about persistent inflation that could lead to further interest rate hikes and pressure corporate valuations.
- Boeing's Decline: Aerospace company Boeing (NYSE:BA) saw its stock drop by 3%, as investor confidence in its future profitability was shaken amid rising oil prices and interest rates, potentially presenting a buying opportunity for long-term investors looking for quality stocks.
- EVgo's Struggles: Renewable energy company EVgo (NASDAQ:EVGO) fell by 2.6%, with market concerns about its profitability prospects increasing in the context of rising energy costs, although the company still holds potential in the renewable sector, it may face short-term pressures.
- Standex's Volatility: Standex (NYSE:SXI) shares dropped by 3.2%, having experienced over ten moves greater than 5% in the past year, indicating that while today's decline reflects market significance, it does not fundamentally alter perceptions of the business, prompting investors to consider its long-term growth potential.
See More
Flowserve Declares Quarterly Dividend of $0.22 per Share
- Quarterly Dividend Declaration: Flowserve has declared a quarterly dividend of $0.22 per share, consistent with previous distributions, indicating the company's stable cash flow and shareholder return strategy, which is expected to bolster investor confidence.
- Dividend Yield: The forward yield of 1.29% reflects the company's attractiveness in the current market environment, potentially drawing in investors seeking stable income.
- Shareholder Record Date: The dividend will be payable on July 10, with a record date of June 26 and an ex-dividend date also on June 26, ensuring shareholders receive timely returns and enhancing their willingness to hold shares.
- Performance Outlook Update: Flowserve reaffirms its adjusted EPS guidance for 2026 at $4 to $4.20 while updating total sales growth expectations to 3% to 6%, demonstrating the company's confidence in future performance and a positive market outlook.
See More
Flowserve Announces 2026 Annual Meeting Voting Results and Dividend Declaration
- Board Election Results: At the 2026 virtual Annual Meeting, Flowserve shareholders elected nine board members, reflecting continued shareholder support for corporate governance, with all members serving until the 2027 meeting, ensuring stability and continuity in governance.
- Executive Compensation Vote Passed: Approximately 94.1% of shareholders approved the advisory vote on executive compensation, indicating trust in the management team and providing a basis for future compensation policies, thereby enhancing governance transparency.
- Auditor Appointment Ratified: Shareholders confirmed the appointment of PricewaterhouseCoopers as Flowserve's independent registered public accounting firm for 2026, ensuring compliance and transparency in financial reporting, which helps bolster investor confidence and maintain the company's reputation.
- Quarterly Cash Dividend Declared: Flowserve's Board announced a quarterly cash dividend of $0.22 per share, payable on July 10, 2026, demonstrating the company's commitment to shareholder returns while reflecting stable cash flow and profitability.
See More
FLSmidth Q1 Earnings: Strong Growth in Service Business
- Order and Revenue Performance: FLSmidth reported Q1 order intake of 3.9 billion Danish kroner, while overall revenue was approximately 3.3 billion Danish kroner, reflecting a 7% organic decline, indicating market demand volatility.
- Profitability Improvement: The EBITDA margin increased to 15.2%, aligning with the company's financial forecasts, demonstrating enhanced profitability driven by strong performance in service and PCV business lines.
- Healthy Cash Flow: Cash flow from operating activities reached 103 million Danish kroner, excluding the impact of the former headquarters sale, showcasing robust cash flow management that supports future investments and shareholder returns.
- Future Outlook: The company provided financial guidance for 2026, projecting organic revenue growth of 1% to 4% and an adjusted EBITDA margin of 15.5% to 16.5%, reflecting a cautiously optimistic view on market recovery.
See More
Flowserve Prices $500M Public Offering of 5.7% Senior Notes
- Bond Offering Size: Flowserve has announced a public offering of $500 million in 5.7% senior notes due in 2036, which is expected to strengthen the company's capital structure and support future financing needs.
- Interest Payment Schedule: The interest on these notes will be paid semi-annually on May 15 and November 15, with the first payment scheduled for November 15, 2026, ensuring a stable cash flow for investors.
- Clear Use of Proceeds: The proceeds from this bond offering will be used to fund the acquisition of Trillium Flow Technologies' Valves Division, with any remaining funds allocated for general corporate purposes, highlighting the company's focus on strategic acquisitions.
- Performance Outlook Update: Flowserve reaffirms its adjusted EPS guidance for 2026 at $4 to $4.20 while updating its total sales growth outlook to 3% to 6%, reflecting the company's confidence in future performance.
See More
Flowserve Faces Pressure from Activist Shareholder Starboard Value
- Execution Challenges: Activist shareholder Starboard Value highlighted that Flowserve has underperformed despite strong trends in reindustrialization and energy security, primarily due to poor execution, which has hindered the company's growth potential in a robust industry.
- Margin Target Discrepancy: Starboard emphasized that Flowserve's target operating profit margin of 20% is below the median target of 23% set by its peers, indicating that failure to improve margins could put the company at a competitive disadvantage, impacting future market share.
- Nuclear Energy Opportunities: With 20% of its backlog coming from the nuclear sector, Starboard believes Flowserve has the potential to become the supplier of choice for both traditional utility-scale nuclear plants and the small modular reactors currently being developed, which could significantly enhance its market position.
- Stock Price Decline Impact: Although Flowserve exceeded Q1 earnings expectations, the company has cut its sales forecast for FY 2026, leading to a 13% drop in its stock price since April 29, which poses pressure on future financing and investor confidence.
See More
Oil Price Surge Triggers Market Sell-Off
- Market Reaction: The stock market experienced a widespread sell-off in the afternoon session due to escalating geopolitical tensions related to the Iran conflict, which pushed oil prices higher, causing the 10-year Treasury yield to rise by nine basis points to 4.57%, its highest level in a year, intensifying concerns about persistent inflation that could lead to further interest rate hikes and pressure corporate valuations.
- Boeing's Decline: Aerospace company Boeing (NYSE:BA) saw its stock drop by 3%, as investor confidence in its future profitability was shaken amid rising oil prices and interest rates, potentially presenting a buying opportunity for long-term investors looking for quality stocks.
- EVgo's Struggles: Renewable energy company EVgo (NASDAQ:EVGO) fell by 2.6%, with market concerns about its profitability prospects increasing in the context of rising energy costs, although the company still holds potential in the renewable sector, it may face short-term pressures.
- Standex's Volatility: Standex (NYSE:SXI) shares dropped by 3.2%, having experienced over ten moves greater than 5% in the past year, indicating that while today's decline reflects market significance, it does not fundamentally alter perceptions of the business, prompting investors to consider its long-term growth potential.
See More
Flowserve Declares Quarterly Dividend of $0.22 per Share
- Quarterly Dividend Declaration: Flowserve has declared a quarterly dividend of $0.22 per share, consistent with previous distributions, indicating the company's stable cash flow and shareholder return strategy, which is expected to bolster investor confidence.
- Dividend Yield: The forward yield of 1.29% reflects the company's attractiveness in the current market environment, potentially drawing in investors seeking stable income.
- Shareholder Record Date: The dividend will be payable on July 10, with a record date of June 26 and an ex-dividend date also on June 26, ensuring shareholders receive timely returns and enhancing their willingness to hold shares.
- Performance Outlook Update: Flowserve reaffirms its adjusted EPS guidance for 2026 at $4 to $4.20 while updating total sales growth expectations to 3% to 6%, demonstrating the company's confidence in future performance and a positive market outlook.
See More
Flowserve Announces 2026 Annual Meeting Voting Results and Dividend Declaration
- Board Election Results: At the 2026 virtual Annual Meeting, Flowserve shareholders elected nine board members, reflecting continued shareholder support for corporate governance, with all members serving until the 2027 meeting, ensuring stability and continuity in governance.
- Executive Compensation Vote Passed: Approximately 94.1% of shareholders approved the advisory vote on executive compensation, indicating trust in the management team and providing a basis for future compensation policies, thereby enhancing governance transparency.
- Auditor Appointment Ratified: Shareholders confirmed the appointment of PricewaterhouseCoopers as Flowserve's independent registered public accounting firm for 2026, ensuring compliance and transparency in financial reporting, which helps bolster investor confidence and maintain the company's reputation.
- Quarterly Cash Dividend Declared: Flowserve's Board announced a quarterly cash dividend of $0.22 per share, payable on July 10, 2026, demonstrating the company's commitment to shareholder returns while reflecting stable cash flow and profitability.
See More
FLSmidth Q1 Earnings: Strong Growth in Service Business
- Order and Revenue Performance: FLSmidth reported Q1 order intake of 3.9 billion Danish kroner, while overall revenue was approximately 3.3 billion Danish kroner, reflecting a 7% organic decline, indicating market demand volatility.
- Profitability Improvement: The EBITDA margin increased to 15.2%, aligning with the company's financial forecasts, demonstrating enhanced profitability driven by strong performance in service and PCV business lines.
- Healthy Cash Flow: Cash flow from operating activities reached 103 million Danish kroner, excluding the impact of the former headquarters sale, showcasing robust cash flow management that supports future investments and shareholder returns.
- Future Outlook: The company provided financial guidance for 2026, projecting organic revenue growth of 1% to 4% and an adjusted EBITDA margin of 15.5% to 16.5%, reflecting a cautiously optimistic view on market recovery.
See More
Flowserve Prices $500M Public Offering of 5.7% Senior Notes
- Bond Offering Size: Flowserve has announced a public offering of $500 million in 5.7% senior notes due in 2036, which is expected to strengthen the company's capital structure and support future financing needs.
- Interest Payment Schedule: The interest on these notes will be paid semi-annually on May 15 and November 15, with the first payment scheduled for November 15, 2026, ensuring a stable cash flow for investors.
- Clear Use of Proceeds: The proceeds from this bond offering will be used to fund the acquisition of Trillium Flow Technologies' Valves Division, with any remaining funds allocated for general corporate purposes, highlighting the company's focus on strategic acquisitions.
- Performance Outlook Update: Flowserve reaffirms its adjusted EPS guidance for 2026 at $4 to $4.20 while updating its total sales growth outlook to 3% to 6%, reflecting the company's confidence in future performance.
See More
