Value
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 5.0 |
| P/S | 9.0 |
| EV/EBITDA | 3.6 |
| Fwd P/E | 7.8 |
| PEG | 4.8 |
| Analyst target | 6.0 |
- ▸Forward P/E: 15.5x
- ▸PEG: 1.69
FLS · Why this verdict
Why Flowserve (FLS) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.4/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Flowserve has strung together four consecutive earnings beats with an average 14% positive surprise and carries strong technical momentum — golden cross, above all moving averages, rising on-balance volume — but the stock has moved above its near-term price target, revenue is declining, and the risk/reward is unfavorable at current levels.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company has beaten consensus earnings estimates in all 4 of the past 4 quarters with an average positive surprise of 14%, most recently beating by 6%, suggesting reliable and consistent delivery above analyst expectations. Earnings | The company beats consensus in at least 3 of the next 4 quarters, sustaining the streak as estimates adjust upward. | →Stable |
| CounterA consistent beat streak often prompts analysts to raise their estimates aggressively, making future beats harder to achieve; if the earnings bar rises faster than the underlying business improves, the streak ends and the multiple could de-rate. | ||
The stock has formed a golden cross, trades above all key moving averages, MACD is bullish, and on-balance volume is rising — buyers are consistently accumulating shares on volume. Momentum | The stock remains above its 200-day moving average and the golden cross holds for the next 6 months, confirming the trend is structural. | ↑Improving |
| CounterThe stock has already moved above its near-term price target, meaning momentum may be running ahead of fundamental value; a technically extended position with limited upside remaining is at elevated risk of mean reversion once momentum buyers rotate out. | ||
Free cash flow converts at 130% of net income with a Piotroski financial strength score of 7 out of 9, indicating the business generates more cash than it earns on paper and is in solid overall financial health. Quality | Free cash flow conversion stays above 100% of net income and the Piotroski score remains at 7 or above for the next 4 quarters. | →Stable |
| CounterCash conversion above 100% can reflect deferral of capital expenditure or favorable working capital timing that normalizes in future periods; if reinvestment needs increase, conversion could compress toward or below the net income level. | ||
Revenue declined 7% year-over-year and the stock now trades above its near-term price target with negative asymmetry — the combination of contracting revenues and exhausted upside creates a difficult risk/reward environment for new buyers. Bear case | This pillar is falsified if revenue growth turns positive year-over-year for 2 consecutive quarters, restoring a growth foundation to underpin the premium multiple. | ↑Improving |
| CounterIndustrial machinery revenues can contract temporarily during a capex pause cycle by end customers without signaling structural demand destruction; a backlog-driven business may show lagged revenue recovery once orders placed during low-capex periods begin to ship. | ||
The company has beaten consensus earnings estimates in all 4 of the past 4 quarters with an average positive surprise of 14%, most recently beating by 6%, suggesting reliable and consistent delivery above analyst expectations.
→StableEarnings
- Expectation
- The company beats consensus in at least 3 of the next 4 quarters, sustaining the streak as estimates adjust upward.
CounterA consistent beat streak often prompts analysts to raise their estimates aggressively, making future beats harder to achieve; if the earnings bar rises faster than the underlying business improves, the streak ends and the multiple could de-rate.
The stock has formed a golden cross, trades above all key moving averages, MACD is bullish, and on-balance volume is rising — buyers are consistently accumulating shares on volume.
↑ImprovingMomentum
- Expectation
- The stock remains above its 200-day moving average and the golden cross holds for the next 6 months, confirming the trend is structural.
CounterThe stock has already moved above its near-term price target, meaning momentum may be running ahead of fundamental value; a technically extended position with limited upside remaining is at elevated risk of mean reversion once momentum buyers rotate out.
Free cash flow converts at 130% of net income with a Piotroski financial strength score of 7 out of 9, indicating the business generates more cash than it earns on paper and is in solid overall financial health.
→StableQuality
- Expectation
- Free cash flow conversion stays above 100% of net income and the Piotroski score remains at 7 or above for the next 4 quarters.
CounterCash conversion above 100% can reflect deferral of capital expenditure or favorable working capital timing that normalizes in future periods; if reinvestment needs increase, conversion could compress toward or below the net income level.
Revenue declined 7% year-over-year and the stock now trades above its near-term price target with negative asymmetry — the combination of contracting revenues and exhausted upside creates a difficult risk/reward environment for new buyers.
↑ImprovingBear case
- Expectation
- This pillar is falsified if revenue growth turns positive year-over-year for 2 consecutive quarters, restoring a growth foundation to underpin the premium multiple.
CounterIndustrial machinery revenues can contract temporarily during a capex pause cycle by end customers without signaling structural demand destruction; a backlog-driven business may show lagged revenue recovery once orders placed during low-capex periods begin to ship.
Per-dimension breakdown
Quality
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 5.7 |
| ROA | 4.8 |
| Gross margin | 3.1 |
| Op margin | 5.4 |
| Net margin | 3.8 |
| Current ratio | 7.7 |
| FCF quality | 9.3 |
| Moat | 4.4 |
| Piotroski F | 7.8 |
- ▸Excellent cash conversion: 130% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 7/9
Growth
2.9/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 0.8 |
| EPS growth | 4.9 |
- ▸Declining revenue: -7%
Momentum
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 5.2 |
| Volume | 1.9 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA but MA still rising (+4.1%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.0 |
| Price target | 7.9 |
| erm sentiment | 4.4 |
- ▸Light analyst coverage (10.0) — signal dampened
- ▸Analyst upside: 22%
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Negligible insider buying — $231,615 (0.003% of mkt cap)
- ▸Institutions accumulating
Peer rank
3.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.7 |
| quality rank | 5.5 |
| growth rank | 0.7 |
Technical
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.0 |
| support resistance | 2.8 |
| 52w position | 5.8 |
Risk (lower is worse)
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.8 |
| days to cover | 5.1 |
| volatility | 3.5 |
| put call | 8.7 |
| implied vol | 3.4 |
| beta | 6.0 |
| debt equity | 6.0 |
Catalyst
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 9.3 |
| dividend safety | 6.8 |
- ▸Perfect beat streak: 4Q
- ▸Earnings in 5 days
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (5)
- MOMENTUM:6.3>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:0.8<1.5@spot
- EARNINGS_PROXIMITY:5d<=7d
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.75
Upside
+6.3%
Downside
8.4%
Sizing output
AVOID
SetupRange Bound — RSI 44 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.4 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Insider at 7.3) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:0.8<1.5@spot, EARNINGS_PROXIMITY:5d<=7d) reinforce the read. Current asymmetry R:R is 0.75 — supplementary context, not the trigger for this path.
The strongest dimensions are Insider at 7.3, Catalyst at 7.2, and Sentiment at 6.6; the weakest are Growth at 2.9, Technical at 3.9, and Peer rank at 3.9. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of 0.75 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Four Quarter Earnings Beat Streak
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2Strong Technical Momentum
Trip ifStock closes below its 200-day moving average for 2 consecutive weeks.
- P3Strong Free Cash Flow Conversion
Trip ifFree cash flow conversion falls below 100% of net income for 2 consecutive quarters.
- P4Revenue Declining Upside Exhausted
Trip ifRevenue growth exceeds 0% year-over-year for 2 consecutive quarters.