Flowserve

Flowserve Corp receives a 3-star quantitative star rating, reflecting our opinion that this share class is a balanced choice, but prudent investors should consider looking elsewhere. The stock currently trades at a price consistent with our quantitative fair value estimate, which has a high uncertainty rating.

The firm's valuation metrics decrease our estimated fair value. A company's valuation metrics provide insights into the market's expectations for its future growth and profitability. Reflecting the firm's valuation is its book value yield of 23.9%, which ranks in the bottom 30% compared with global peers. The market value of this company's shares looks expensive relative to the book (accounting) value of equity, which contributes to our balanced fair value estimate.

Alternatively, the firm's solid growth is reassuring. Consistent revenue and earnings growth indicates a company's potential for increased market share and profitability. The firm's EPS 5-year growth of 22.6%, for example, lies in the top 20% globally. The robust five-year track record of EPS growth is reason to be optimistic about the firm's shares. This characteristic further promotes our neutral price/fair value ratio.

In addition to the aforementioned drivers, our model considers momentum as part of its comprehensive analysis. This share class has outperformed the broader universe over the past year. While we believe the stock is fairly-valued, this outperformance had a negative impact on our valuation estimate.

The narrow moat rating for this company indicates investors can expect it to generate 10 years or more of excess returns on capital due to its respectable competitive advantages. In addition, the company's moderate financial health score is decent and doesn't seriously concern us with regard to financial distress.