Flowserve Corporation (FLS) & Franklin Electric Co. (FELE) Critical Comparison

Franklin Electric Co. (NASDAQ: FELE) and Flowserve Corporation (NYSE:FLS) are both industrial products companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, valuation, institutional ownership, profitabiliy and analyst recommendations.

Insider and Institutional Ownership

78.9% of Franklin Electric Co. shares are held by institutional investors. Comparatively, 98.7% of Flowserve Corporation shares are held by institutional investors. 2.5% of Franklin Electric Co. shares are held by insiders. Comparatively, 1.0% of Flowserve Corporation shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and target prices for Franklin Electric Co. and Flowserve Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Franklin Electric Co. 0 0 1 0 3.00
Flowserve Corporation 1 3 6 0 2.50

Franklin Electric Co. currently has a consensus price target of $40.00, suggesting a potential downside of 0.99%. Flowserve Corporation has a consensus price target of $57.86, suggesting a potential upside of 21.93%. Given Flowserve Corporation’s higher probable upside, analysts plainly believe Flowserve Corporation is more favorable than Franklin Electric Co..

Valuation & Earnings

This table compares Franklin Electric Co. and Flowserve Corporation’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Franklin Electric Co. $951.68 million 1.97 $143.74 million $1.70 23.76
Flowserve Corporation $3.91 billion 1.59 $445.71 million $0.93 51.02

Flowserve Corporation has higher revenue and earnings than Franklin Electric Co.. Franklin Electric Co. is trading at a lower price-to-earnings ratio than Flowserve Corporation, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Franklin Electric Co. and Flowserve Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Franklin Electric Co. 8.48% 13.04% 7.72%
Flowserve Corporation 3.12% 15.76% 5.61%

Volatility and Risk

Franklin Electric Co. has a beta of 1.62, meaning that its stock price is 62% more volatile than the S&P 500. Comparatively, Flowserve Corporation has a beta of 1.52, meaning that its stock price is 52% more volatile than the S&P 500.

Dividends

Franklin Electric Co. pays an annual dividend of $0.43 per share and has a dividend yield of 1.1%. Flowserve Corporation pays an annual dividend of $0.76 per share and has a dividend yield of 1.6%. Franklin Electric Co. pays out 25.3% of its earnings in the form of a dividend. Flowserve Corporation pays out 81.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Franklin Electric Co. has raised its dividend for 7 consecutive years and Flowserve Corporation has raised its dividend for 10 consecutive years. Flowserve Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Franklin Electric Co. beats Flowserve Corporation on 9 of the 17 factors compared between the two stocks.

Franklin Electric Co. Company Profile

Franklin Electric Co., Inc. designs, manufactures and distributes water and fuel pumping systems, consisting of submersible motors, pumps, electronic controls and related parts and equipment. Its segments include Water Systems segment, the Fueling Systems segment and Other. Its Water Systems segment is engaged in the production and marketing of water pumping systems and offers motors, pumps, drives, electronic controls and monitoring devices. It also designs, manufactures and sells motors, pumps, electronic controls and related parts and equipment for use in groundwater, wastewater and fuel transfer applications. Its Fueling Systems is engaged in the production and marketing of fuel pumping systems, fuel containment systems, and monitoring and control systems. It also designs, manufactures and sells pumps, pipe, sumps, fittings, vapor recovery components, electronic controls, monitoring devices and related parts and equipment for use in submersible fueling system applications.

Flowserve Corporation Company Profile

Flowserve Corporation is a manufacturer and aftermarket service provider of flow control systems. The Company’s segments include Engineered Product Division, Industrial Product Division and Flow Control Division. Its geographic segments include North America, Europe, Asia Pacific, Middle East and Africa, and Latin America. It develops and manufactures precision-engineered flow control equipment integral to the movement, control and protection of the flow of materials in its customer’s critical processes. Its product portfolio of pumps, valves, seals, automation and aftermarket services supports infrastructure industries, including oil and gas, chemical, power generation and water management. It offers aftermarket equipment services, such as installation, diagnostics, repair and retrofitting through manufacturing platform and network of Quick Response Centers. Its products include oil and gas, general industries, chemical, power generation and water management.

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