Investment Thesis
Flowserve faces critical fundamental deterioration masked by accounting anomalies: operating cash flow is negative ($-43.1M) despite $81.7M net income, indicating severe quality-of-earnings issues. Returns on capital are distressed (ROE 3.7%, ROA 1.4%), and revenue data reporting ($0.00) reveals potential data integrity problems requiring immediate clarification.
Strengths
- Solid balance sheet with $2.2B stockholders equity and $792.4M cash
- Strong liquidity position (Current Ratio 2.22x, Quick Ratio 1.63x)
- Moderate leverage (Debt/Equity 0.75x) with acceptable interest coverage of 5.8x
Risks
- Severe cash generation crisis: negative $60.0M free cash flow while reporting positive earnings signals earnings quality breakdown
- Data integrity concerns: reported $0.00 revenue with positive gross profit and operating income is mathematically impossible
- Critically low returns on capital (ROE 3.7%, ROA 1.4%) indicate poor capital efficiency and value destruction
Key Metrics to Watch
- Operating cash flow trend - current negative position is unsustainable
- Revenue reporting correction and reconciliation with income statement items
- Return on Equity progression - must exceed 8%+ to justify equity investment
Financial Metrics
Revenue
0.0
Net Income
81.7M
EPS (Diluted)
$0.64
Free Cash Flow
-60.0M
Total Assets
5.7B
Cash
792.4M
Profitability Ratios
Gross Margin
N/A
Operating Margin
N/A
Net Margin
N/A
ROE
3.7%
ROA
1.4%
FCF Margin
N/A
Balance Sheet & Liquidity
Current Ratio
2.22x
Quick Ratio
1.63x
Debt/Equity
0.75x
Debt/Assets
52.8%
Interest Coverage
5.85x
Long-term Debt
1.7B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-06T15:11:01.400602 |
Data as of: 2026-03-31 |
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