Flow control equipment manufacturer Flowserve (NYSE: FLS) missed Wall Street’s revenue expectations in Q1 CY2026, with sales falling 6.7% year on year to $1.07 billion. Its non-GAAP profit of $0.85 per share was 6.2% above analysts’ consensus estimates.

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Company Overview

Manufacturing the largest pump ever built for nuclear power generation, Flowserve (NYSE: FLS) manufactures and sells flow control equipment for various industries.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Flowserve grew its sales at a tepid 4.7% compounded annual growth rate. This wasn’t a great result compared to the rest of the industrials sector, but there are still things to like about Flowserve.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Flowserve’s recent performance shows its demand has slowed as its annualized revenue growth of 2.5% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs.

We can better understand the company’s revenue dynamics by analyzing its backlog, or the value of its outstanding orders that have not yet been executed or delivered. Flowserve’s backlog reached $2.95 billion in the latest quarter and averaged 5.1% year-on-year growth over the last two years. Because this number is better than its revenue growth, we can see the company accumulated more orders than it could fulfill and deferred revenue to the future. This could imply elevated demand for Flowserve’s products and services but raises concerns about capacity constraints.

This quarter, Flowserve missed Wall Street’s estimates and reported a rather uninspiring 6.7% year-on-year revenue decline, generating $1.07 billion of revenue.

Looking ahead, sell-side analysts expect revenue to grow 9.5% over the next 12 months, an improvement versus the last two years. This projection is admirable and indicates its newer products and services will fuel better top-line performance.

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Operating Margin

Flowserve has done a decent job managing its cost base over the last five years. The company has produced an average operating margin of 8.2%, higher than the broader industrials sector.

Analyzing the trend in its profitability, Flowserve’s operating margin rose by 2 percentage points over the last five years, as its sales growth gave it operating leverage.

In Q1, Flowserve generated an operating margin profit margin of 11.2%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Flowserve’s EPS grew at 15.4% compounded annual growth rate over the last five years, higher than its 4.7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Flowserve’s earnings to better understand the drivers of its performance. As we mentioned earlier, Flowserve’s operating margin was flat this quarter but expanded by 2 percentage points over the last five years. On top of that, its share count shrank by 1.8%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Flowserve, its two-year annual EPS growth of 28.6% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q1, Flowserve reported adjusted EPS of $0.85, up from $0.62 in the same quarter last year. This print beat analysts’ estimates by 6.2%. Over the next 12 months, Wall Street expects Flowserve’s full-year EPS of $3.77 to grow 13.2%.

Key Takeaways from Flowserve’s Q1 Results

It was good to see Flowserve beat analysts’ EPS expectations this quarter. On the other hand, its revenue missed and its adjusted operating income fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 6.1% to $79.14 immediately after reporting.

Flowserve may have had a tough quarter, but does that actually create an opportunity to invest right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).