FLOWSERVE CORP (FLS): what the price assumes

In the published model solve dated 2026-Q2, anchored at $80.33, FLOWSERVE CORP (FLS) is priced for today's economics sustained for ~6.6 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-26.

Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/FLS

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 9.6% cost of capital; growth searched up to the 25% self-funding ceiling.

How unusual the bet is: elevated (limited comparison data)

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.7%); the inversion above states its own rate.

Per-Model Detail (n=15)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

• Aftermarket work, meaning repairs, spare parts and retrofits on pumps and valves already bolted into a customer's plant, was approximately 57% of first-quarter sales against approximately 51% a year earlier, and that shift is why gross profit rose to 379.8 million dollars even as sales fell to 1,068.3 million.
• Today's price embeds operating-profit growth near 23.9% a year, a pace only about 32% of comparable fast growers have sustained over a stretch that long, while the reported top line is currently shrinking.
• Second-quarter results are due July 29, 2026 and will be the first print to carry the Trillium valves business, bought for 490 million dollars in an all-cash deal that closed June 30, 2026.

Bull Case

Read Flowserve as an order book and you will read it wrong. The first quarter is the demonstration. Sales fell to 1,068.3 million dollars from 1,144.5 million, and gross profit went the other way, rising to 379.8 million from 369.3 million. That is not a rounding artefact. It is mix. Aftermarket sales, the repairs and replacement parts and retrofits on equipment already installed in refineries, chemical plants and power stations, were approximately 57% of total sales in the quarter against approximately 51% in the same quarter of 2025. That revenue does not arrive when a customer decides to build something. It arrives when a customer decides to keep running.

The reason the aftermarket holds is physical rather than commercial. A pump that has been engineered to a specific process, installed, and run for a decade is not casually swapped for a competitor's. The annual report puts it plainly: "In geographic regions where we are positioned to provide quick response, we believe customers have traditionally relied on us, rather than our competitors, for aftermarket products due to our highly engineered and customized products." The filing pairs that with the operational commitment behind it, 24-hour service in all major markets and in-house repair and return manufacturing worldwide. Speed is the moat. A refinery losing production per hour does not shop.

Capital allocation has been pointed at the same mechanic rather than at revenue for its own sake. MOGAS, a severe-service valve business, went into the Flow Control division in October 2024. Greenray Turbine Solutions, a UK provider of aftermarket products and services for industrial gas turbines, was bought during the first quarter of 2026 for 72.4 million dollars. Then on June 30, 2026 Flowserve closed the all-cash purchase of Trillium Flow Technologies' Valves Division for 490 million dollars, a nuclear and power-generation valve business the company describes as carrying roughly 200 million dollars of annualised revenue after applying its own operating principles. Each of those adds installed equipment. Installed equipment is what generates the aftermarket stream a decade out.

The margin headroom is the part the cohort makes visible. Operating income was 119.4 million dollars in the quarter, 11.2% of sales. IDEX (IEX) converts 20.7% of revenue into operating profit, DOVER (DOV) 16.7%, XYLEM (XYL) 13.6% and TIMKEN (TKR) 12.1%. Management's own stated ambition is a 20% adjusted operating margin by 2030, on its own adjusted basis, alongside mid-single-digit organic sales growth from 2025 to 2030. Those are targets rather than results. But the cohort establishes that the level is achievable in this industry, which is a different and stronger claim than management asserting it about itself.

The obvious objection is that none of this is showing up in the top line yet, and it is not. Backlog does provide one piece of forward evidence: 2.9 billion dollars at March 31, 2026, up 78.0 million or 2.7% against December 31, 2025, with the Flow Control division's book up 5.8%. A shrinking revenue line with a growing backlog and a rising gross profit dollar is a company changing what it sells, not a company running out of customers.

Bear Case

A business compounding on its own does not need to buy the compounding. Over ten weeks this spring Flowserve issued 500 million dollars of 5.700% senior notes maturing in 2036 and then spent 490 million dollars in cash on Trillium's valves division. Over the same stretch its own reported sales fell 6.7% year over year and operating income fell 9.4%. Acquisitions are a legitimate way to grow. They are also what a company reaches for when the organic line will not move, and the reader should price the difference.

The requirement embedded in the shares is the harder number. Today's price assumes operating profit compounds near 23.9% a year before settling into a slower terminal pace. What the business has just delivered is a 9.4% decline. The persistence record supplies the second constraint: of comparable fast growers, only about 32% sustained that kind of pace over a stretch that long. So the bet is not merely that Flowserve reverses the current direction. It is that Flowserve reverses it, reaches a growth rate it has not shown, and then holds it for years against a base rate that says two out of three companies in that position did not. If the requirement mean-reverts toward what the company currently earns, the methods that value it on present cash generation rather than on future growth are where the shares re-rate, and those methods sit a long way underneath the price.

The end markets are not a stable platform for that kind of persistence, and the annual report says so without hedging: "The businesses of many of our customers, particularly energy companies, chemical companies and general industrial companies, are to varying degrees cyclical and have experienced periodic downturns." Chemical alone accounted for approximately 19% of bookings in both 2025 and 2024. The aftermarket franchise dampens that cycle; it does not remove it, because maintenance budgets are cut in the same meetings that defer capital projects.

There is also a governance signal that the bull case has to absorb. On May 28, 2026 Flowserve issued a statement responding to a letter from Starboard Value, confirming that members of management had held discussions with the activist in recent months, and used the occasion to reaffirm its 2030 targets. An activist arriving proves nothing about the business. What it measures is the size of the gap between the 11.2% operating margin the company reports now and the 20% adjusted figure it is aiming at for 2030, and how many years management wants to take getting there. Someone with capital decided that gap was worth pushing on.

Finally, the balance sheet has moved and moved in one direction. Debt and finance lease obligations stood at 1,715.0 million dollars against 792.4 million dollars of cash at March 31, 2026, and both the notes issue and the Trillium payment landed after that date. Interest expense in the quarter was already 20.4 million against 19.2 million a year earlier. That is manageable against the profit the business generates. It is also a reduced margin for error at a moment when the shares are priced for a growth rate the company is not currently producing.

Valuation

The bet is specific and it is steep. Today's price assumes operating profit compounds near 23.9% a year over the next several years before settling into a slower terminal pace, at a cost of capital just under 10%. Every percentage point of that discount rate moves the required growth by roughly seven points, which is a way of saying the number is sensitive rather than surveyed. What it is not sensitive to is direction: the most recent quarter had operating profit down 9.4%.

The methods do not agree with each other, and the shape of the disagreement is the useful part. The peer-multiple methods land above today's price, and the cash-flow methods that credit future growth sit close to it, the price standing about 17% above where the forward-growth methods reach. The methods that value the business on what it currently produces are somewhere else entirely: the price sits roughly 229% above the earnings-power methods, and well above the asset-value methods too. That is not a contradiction so much as a description. The earnings-power lens takes the company's current free cash flow and capitalises it forever with no growth at all. On that assumption Flowserve is worth a fraction of the quote. The quote is therefore almost entirely a statement about growth.

The concrete version of what has to be true runs through margin rather than volume. Operating income was 11.2% of sales in the first quarter, and management's stated goal is a 20% adjusted operating margin by 2030 on its own adjusted basis. The cohort shows the destination exists: IDEX (IEX) already runs a 20.7% operating margin and DOVER (DOV) 16.7%, on comparable industrial flow and motion portfolios. The distance is what the price is underwriting, and the schedule for closing it is the variable nobody outside the company can observe.

Persistence is the other half. Only about 32% of comparable fast growers sustained a pace like the one embedded here over a comparable stretch. Set that against the aftermarket mix, which reached approximately 57% of sales in the quarter against approximately 51% a year earlier, and the argument becomes legible: recurring service revenue is exactly the sort of stream that could make an unusual persistence record less unusual, if it keeps growing as a share of the whole.

On the balance sheet, debt and finance lease obligations of 1,715.0 million dollars sat against 792.4 million dollars of cash at March 31, 2026, with operating profit covering the interest bill several times over. The share count has been flat to slightly lower over the past four years. Neither figure bounds the downside the way net cash would, and both moved further after quarter end, when the notes were issued and the acquisition was paid for. The balance sheet is not the risk here. The schedule is.

Catalysts

Second-quarter results are scheduled for July 29, 2026, after the close. They arrive four weeks after the largest single move Flowserve has made in years, and they will not yet contain much of it.

That move was Trillium Flow Technologies' Valves Division, closed on June 30, 2026 in an all-cash deal worth 490 million dollars plus working capital adjustments. The company describes the acquired business as a supplier of mission-critical valves to nuclear and traditional power generation with roughly 200 million dollars of annualised revenue once its own operating principles are applied. The funding came first: 500 million dollars of 5.700% senior notes due 2036, issued May 12, 2026 with a clause requiring redemption at 101 if the Trillium purchase failed to complete. That clause is now moot, which is itself the news. A smaller move landed earlier, when Greenray Turbine Solutions, a UK industrial gas turbine service provider, was acquired during the first quarter for 72.4 million dollars.

The other live thread is an activist. On May 28, 2026 Flowserve responded publicly to a letter from Starboard Value, confirming that management had been in discussions with the firm and restating its 2030 financial targets and its 2026 guidance in the same statement. Two things to watch in the July print, then: whether the aftermarket share of sales keeps climbing, and what management says about the pace at which the operating margin closes on its stated target. The second question is the one an activist asks.

Peer Cohorts (Per Segment, With Filing Citations)

Flowserve Pump Division (FPD) (reported)

• FELE (FRANKLIN ELECTRIC CO., INC.)
• FY2025 10-K: …for the Company's growth as a global provider of water and energy systems, through geographic expansion and product line extensions, leveraging its global platform and competency in system design, all while consistently offering the best value to its customer. Markets and Applications The Company's business consists…
• FY2025 10-K: …and sells motors, pumps, electronic controls, water treatment systems and related parts and equipment primarily for use in submersible water or other fluid system applications. The Energy Systems segment designs, manufactures and sells pumps, electronic controls and related parts and equipment primarily for use in…
• GTES (Gates Industrial Corporation plc)
• FY2025 10-K: …products represented approximately 62% of our total net sales for Fiscal 2025. Our Fluid Power segment includes hoses, tubing and fittings designed to convey hydraulic fluid at high pressures in both mobile and stationary applications, and other high-pressure and fluid transfer hoses. Our fluid power products…
• FY2025 10-K: …have generally been increasing, leading to more wear and tear on vehicles and the replacement of products that we supply. A smaller portion of our power transmission aftermarket business is generated in emerging markets, which generally have a smaller base of installed equipment and relatively nascent distribution…
• GTLS (CHART INDUSTRIES, INC.)
• FY2025 10-K: …and CO2 capture among other applications. Chart is committed to excellence in ESG issues both for its company as well as its customers. With 62 global manufacturing locations and over 50 service centers from the United States to Asia, Australia, India, Europe the Middle East, Africa and South America, we maintain…
• FY2025 10-K: …notes and unsecured notes. Howden is a leading global provider of mission critical air and gas handling products providing service and support to customers around the world in highly diversified end markets and geographies. The combination of Chart and Howden is complementary and furthers our global leadership…
• RRX (REGAL REXNORD CORP)
• FY2025 10-K: 145 facilities, of which 50 are principal manufacturing facilities and 27 are principal warehouse facilities. The IPS segment's present operating facilities contain a total of approximately 10.3 million square feet of space, of which approximately 32% are leased. The following represents our principal manufacturing…
• FY2025 10-K: …The segment serves a broad range of markets that include general industrial, metals and mining, energy, discrete automation and commercial HVAC. • The PES segment designs and produces fractional to approximately 5 horsepower AC and DC motors, electronic variable speed controls, electronic drives, fans and blowers, as…
• TKR (TIMKEN CO)
• FY2025 10-K: …us-gaap:FairValueInputsLevel3Member us-gaap:PensionPlansDefinedBenefitMember us-gaap:DefinedBenefitPlanCashAndCashEquivalentsMember 2025-12-31 0000098362 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel12And3Member us-gaap:PensionPlansDefinedBenefitMember…
• FY2025 10-K: …us-gaap:FairValueInputsLevel2Member us-gaap:PensionPlansDefinedBenefitMember tkr:AnnuityContractsMember 2024-12-31 0000098362 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member us-gaap:PensionPlansDefinedBenefitMember tkr:AnnuityContractsMember 2024-12-31 0000098362…
• XYL (Xylem Inc.)
• FY2025 10-K: …with product offerings in the filtration and separation, disinfection, and wastewater solutions, for municipal and industrial applications. In the Water Infrastructure segment we reach customers indirectly, through channel partners and distributors, directly and through our service capabilities. • Applied Water…
• FY2025 10-K: …Our ability to deliver innovative product offerings has enabled us to compete effectively, cultivate and maintain customer relationships and serve and expand into many niche and new markets. 8 Measurement and Control Solutions Measurement and Control Solutions develops advanced technology solutions that enable…
• IEX (IDEX CORP)
• FY2025 10-K: …process. The CODM considers Adjusted EBITDA budget and forecast-to-actual variances when making decisions about the allocation of operating and capital resources to each segment. Adjusted EBITDA is also used in determining the compensation of certain employees. 68 Table of Contents The HST segment designs, produces…
• FY2025 10-K: …and manufacture of laboratory and production equipment used in the production of micro and nano scale materials for the pharmaceutical, biologics, personal care and chemical markets. Microfluidics is the exclusive producer of the Microfluidizer family of high shear fluid processors for uniform nano-emulsion…
• DOV (DOVER Corp)
• FY2025 10-K: …of traditional and clean fuels (including liquefied natural gas, hydrogen, and electric vehicle charging), cryogenic gases, and other hazardous substances along the supply chain, and safe and efficient operation of convenience retail, retail fueling and vehicle wash establishments. • Imaging & Identification segment…
• FY2025 10-K: …service solutions used in textile, apparel, soft signage and specialty materials markets. Businesses within this segment leverage digital printing capabilities and operate business models that involve initial equipment and software sales followed by consumable, software, and service aftermarket revenue streams. Our…

Flow Control Division (FCD) (reported)

• ROK (Rockwell Automation, Inc.)
• FY2025 10-K: …Current Report on Form 8-K dated July 1, 2022, is hereby incorporated by reference. 10-j-2 $500,000,000 364-Day Term Loan Agreement dated as of May 16, 2025, among the Company, the Banks listed on the signature pages thereto, Bank of America, N.A., as Administrative Agent, U.S. Bank National Association, as…
• FY2025 10-K: …(CODM), our Chief Executive Officer, to allocate resources and assess performance. We organize our business into three operating segments: Intelligent Devices, Software & Control, and Lifecycle Services. This structure emphasizes our essential offerings, leverages our sharpened industry focus, and recognizes the…
• PH (PARKER-HANNIFIN CORPORATION)
• FY2025 10-K: We offer hundreds of thousands of individual part numbers, and no single product contributed more than one percent to our total net sales for the year ended June 30, 2025. Listed below are some of our principal products. Diversified Industrial Segment . Our Diversified Industrial Segment products consist of a broad…
• FY2025 10-K: …increases • Investing in organic growth and productivity • Strategic acquisitions that strengthen our portfolio • Share repurchases, including repurchases under the 10b5-1 share repurchase program Cash Flows A summary of cash flows follows: (dollars in millions) 2025 2024 Cash provided by (used in): Operating…
• XYL (Xylem Inc.)
• FY2025 10-K: …include smart metering, networked communications, measurement and control technologies, critical infrastructure technologies, software and services including cloud-based analytics, and remote monitoring and data management. The Water Solutions and Services segment provides tailored services and solutions, in…
• FY2025 10-K: …Our ability to deliver innovative product offerings has enabled us to compete effectively, cultivate and maintain customer relationships and serve and expand into many niche and new markets. 8 Measurement and Control Solutions Measurement and Control Solutions develops advanced technology solutions that enable…
• IEX (IDEX CORP)
• FY2025 10-K: …process. The CODM considers Adjusted EBITDA budget and forecast-to-actual variances when making decisions about the allocation of operating and capital resources to each segment. Adjusted EBITDA is also used in determining the compensation of certain employees. 68 Table of Contents The HST segment designs, produces…
• FY2025 10-K: …fluoroplastic lined corrosion-resistant magnetic drive and mechanical seal pumps, shut-off, control and safety valves for corrosive, hazardous, contaminated, pure and high-purity fluids. Valves is comprised of the following businesses: • Richter and Aegis produce superior solutions for demanding and complex pump and…
• EMR (EMERSON ELECTRIC CO.)
• FY2025 10-K: …Discussion and Analysis of Financial Condition and Results of Operations." INTELLIGENT DEVICES Final Control The Final Control segment is a leading global provider of control valves, isolation valves, shutoff valves, pressure relief valves, pressure safety valves, actuators, and regulators for process and hybrid…
• FY2025 10-K: …sustainability and safety. The Discrete Automation segment includes solenoid valves, pneumatic valves, valve position indicators, pneumatic cylinders and actuators, air preparation equipment, pressure and temperature switches, electric linear motion solutions, programmable automation control systems and software,…
• AME (AMETEK, Inc.)
• FY2025 10-K: …does not have an alternative use and the Company has an enforceable right to payment for performance completed to date. The Company recognizes incremental cost of obtaining contracts as an expense when incurred if the amortization period of the contract cost assets that the Company would have otherwise recognized is…
• FY2025 10-K: 4 million shares at a cost of $ 2,114.0 million at December 31, 2024. The number of shares outstanding at December 31, 2025 was 229.0 million shares, compared with 230.7 million shares at December 31, 2024. Subsequent Event Effective February 12, 2026, the Company's Board of Directors approved a 10 % increase in the…
• DOV (DOVER Corp)
• FY2025 10-K: …of traditional and clean fuels (including liquefied natural gas, hydrogen, and electric vehicle charging), cryogenic gases, and other hazardous substances along the supply chain, and safe and efficient operation of convenience retail, retail fueling and vehicle wash establishments. • Imaging & Identification segment…
• FY2025 10-K: …of goods and services. 95 Table of Contents DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands except share data and where otherwise indicated) 19. Segment Information The Company categorizes its operating companies into five reportable segments: Engineered Products, Clean Energy &…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.