Why Nearly $400 Million Has Poured Into Flowserve Stock — Is the Manufacturer a Buy?
Key Points
New York City-based D1 Capital Partners bought nearly 5.8 million shares of Flowserve in the third quarter.
The value of the position increased by $309.2 million from quarter to quarter.
At quarter-end, D1 reported holding nearly 7.5 million Flowsere shares valued at $397.5 million.
New York City-based D1 Capital Partners reported a major increase in its holding of Flowserve (NYSE:FLS), buying nearly 5.8 million shares in the third quarter and seeing an estimated $309.2 million position value change, according to a November 14 SEC filing.
What Happened
According to a filing with the Securities and Exchange Commission dated November 14, D1 Capital Partners substantially increased its stake in Flowserve during the third quarter. The fund added nearly 5.8 million shares, bringing its total to about 7.5 million shares as of September 30. The position was valued at $397.5 million at quarter-end.
What Else to Know
The fund's Flowserve stake now represents 4.6% of its $8.7 billion in reportable U.S. equity holdings.
Top five holdings following the filing:
- NASDAQ: CART: $829.2 million (9.5% of AUM)
- NASDAQ: APP: $601.3 million (6.9% of AUM)
- NYSE: CLH: $567.9 million (6.5% of AUM)
- NYSE: RDDT: $465.6 million (5.4% of AUM)
- NYSE: FLS: $397.5 million (4.6% of AUM)
As of Friday, shares of Flowserve were priced at $72.04, up 17% over the prior year and outperforming the S&P 500, which is up 13% in the same period.
Company Overview
| Metric | Value |
|---|---|
| Revenue (TTM) | $4.7 billion |
| Net Income (TTM) | $452.8 million |
| Market Capitalization | $9.4 billion |
| Price (as of market close Friday) | $72.04 |
Company Snapshot
Flowserve designs, manufactures, and services industrial flow management equipment with a presence in the United States, Europe, the Middle East, Africa, Asia, and internationally, offering a range of flow control products. The company generates revenue through the sale of engineered flow control products and aftermarket services, with a focus on both new equipment and recurring maintenance contracts. It serves customers in oil and gas, chemical and pharmaceutical, power generation, water management, and a range of general industrial markets worldwide.
Foolish Take
Even after a strong run over the past year, Flowserve’s renewed momentum — and this step-up in institutional conviction behind it — matters for long-term investors. The stock is nearing all-time highs, and the latest quarter showed the kind of operational consistency that tends to support durable reratings: expanding margins, rising cash generation, and a business mix increasingly skewed toward higher-quality aftermarket revenue.
Flowserve’s third-quarter results underscored that strength. Sales rose 3.6% year over year to $1.2 billion, while adjusted operating margin jumped 370 basis points to 14.8%. Adjusted EPS climbed to $0.90, up 45% from last year. Bookings topped $1.2 billion, including 6% aftermarket growth—an important signal of recurring demand.
For a fund like D1, Flowserve’s accelerating profitability and backlog strength are a fitting profile. And as evidence, the position now makes up 4.6% of its equity book, placing it alongside higher-growth names like Reddit and Clean Harbors.
Glossary
Position value: The total market value of a specific investment held by a fund.
AUM (Assets Under Management): The total market value of all assets a fund or investment manager oversees.
Reportable U.S. equity assets: U.S. stocks that an institutional investor must disclose in regulatory filings.
Trailing twelve months (TTM): The 12-month period ending with the most recent quarterly report.
Forward price/earnings ratio: A valuation metric comparing a company's current share price to its expected future earnings per share.
EV/EBITDA: Enterprise Value divided by Earnings Before Interest, Taxes, Depreciation, and Amortization; used to value a company.
Dividend yield: Annual dividends per share divided by the share price, expressed as a percentage.
Aftermarket services: Services provided after the initial sale, such as maintenance, repairs, and spare parts.
Maintenance contracts: Agreements for ongoing service and support of equipment after purchase.
Industrial flow management equipment: Machinery like pumps, valves, and seals used to control liquids or gases in industrial processes.
Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool recommends Flowserve, Instacart, and Reddit. The Motley Fool has a disclosure policy.