Key Takeaways
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Flowserve jumped 12% on Thursday today after third-quarter adjusted EPS of $1.07 beat the 98-cent consensus and its backlog hit a record $3.5 billion.
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Wider margins drove the beat, with organic sales down 1.2%.
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Flowserve cut its 2026 sales outlook on Middle East delays but raised its adjusted EPS guidance floor.
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Baker Hughes sees the Middle East improving but expects activity there to dip in the fourth quarter, and ITT and Emerson report on Nov. 4.
Flowserve ( FLS:NYSE )shares jumped 12% on Thursday after a third-quarter beat and a record $3.5 billion backlog.
The Middle East delays behind that backlog matter to ITT ( ITT:NYSE ), Emerson Electric ( EMR:NYSE )and Baker Hughes ( BKR:NASDAQ )too: all three sell into the same energy and process projects.
Margins carried the quarter
Revenue of $1.24 billion matched estimates, and organic sales fell 1.2%. Adjusted EPS still rose 19% to $1.07 and beat the 98-cent consensus. The driver was adjusted operating margin, which widened 170 basis points to 16.5%.
Flowserve also raised the bottom of its 2026 adjusted EPS range to $4.10, keeping the top at $4.20. Analysts expect earnings to keep climbing through 2028:
The new floor matches the old $4.10 consensus, so 2026 estimates shouldn't move much. But if margins keep widening as sales recover, 2027's $4.62 looks beatable.
The backlog is waiting on the Middle East
Flowserve now expects 2026 organic sales to fall 1.5% to 2.5%, from a drop of about 1% before. CEO Scott Rowe said Middle East conditions are "delaying customer activity and revenue conversion."
Bookings still rose 14% to $1.38 billion, or 8% organically. Analysts are penciling in the catch-up for 2027…
If the Middle East sales only slip into next year, 2027's $5.20 billion stands to pick them up.
TIKR tracks 11 analysts on Flowserve. How many say "Buy"?
See the full breakdown of Buy, Hold, and Sell ratings on Flowserve, along with Wall Street's revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Flowserve's Analyst Ratings
Not everyone sees the same Middle East
Baker Hughes gets nearly 40% of its revenue from the Middle East, so its read carries weight. Its energy technology unit's backlog hit a record $39.4 billion. Still, it expects Middle East activity to dip in the fourth quarter.
ITT and Emerson both report on Nov. 4, so the next read on the region is days away.
The backlog earns the jump
My take: Flowserve grew earnings while organic sales went backward, and a record backlog says the sales are coming. That earns Thursday's jump.
The risk: if the Middle East delays run into 2027, the backlog will turn into sales more slowly. Cash from operations also fell to $144 million from $402 million a year earlier, so conversion matters.
So what is Flowserve stock actually worth?
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