Q1 Earnings Review: Gas and Liquid Handling Stocks Led by Flowserve (FLS)

The gas and liquid handling sector delivered a resilient performance in Q1 2025, with Flowserve Corporation (NYSE: FLS) leading the charge with record bookings, margin expansion, and reaffirmed guidance. While macroeconomic uncertainties loom, companies like Flowserve are leveraging strong aftermarket demand, strategic acquisitions, and operational discipline to outperform expectations.

Flowserve’s Dominant Q1: Backlog and Margins Soar

Flowserve reported $1.14 billion in revenue, a 5.2% year-over-year (YoY) increase, surpassing analysts’ estimates by 3.6%. The growth was fueled by robust aftermarket demand, with bookings hitting $1.2 billion (+18.1% YoY), including record $689 million in aftermarket sales (+19.6% YoY). The Power segment also shone, with bookings surging 45% YoY, driven by nuclear awards exceeding $100 million for the third consecutive quarter.

Margins expanded significantly:
- Adjusted gross margin rose to 33.5% (+180 basis points YoY).
- Adjusted operating margin hit 12.8% (+190 basis points), driven by cost efficiencies in its Flowserve Business System.
- Adjusted EPS reached $0.72, a 24.1% YoY increase, outpacing the consensus estimate of $0.60.

The company’s $2.9 billion backlog (up 11.1% YoY) signals strong demand visibility, with CEO Scott Rowe emphasizing execution and backlog strength as key mitigants to global tariff risks.

Peer Performance: A Mixed Bag of Growth and Headwinds

Flowserve’s results were part of a broader sector trend, though peers faced varying challenges:

Standex (NYSE: SXI): Acquisitions Fuel Explosive Growth

Standex delivered $207.8 million in revenue (+17.2% YoY), outperforming estimates by 1.7%. Its fast-growth market sales (e.g., renewable energy, defense) hit $60.4 million (29% of total sales), while 13 new product launches contributed incremental sales. The stock rose 5.8% post-earnings to $153.49.

Ingersoll Rand (NYSE: IR): Missed EBITDA Guidance Amid Macroeconomic Volatility

Despite $1.72 billion in revenue (+2.8% YoY), Ingersoll Rand missed its full-year EBITDA target due to global supply chain and tariff pressures. The stock still rose 4% to $79.23, reflecting optimism in its long-term strategy.

IDEX (NYSE: IEX): Outperformed with Engineered Solutions

IDEX posted $814.3 million in revenue (+1.7% YoY), exceeding estimates by 1.1%, with its highly engineered products (e.g., pumps, flow meters) driving margin expansion. The stock surged 6.3% to $184.65.

Sector Dynamics: Opportunities and Risks

Growth Drivers:
- Nuclear Energy: Flowserve’s third consecutive quarter of $100M+ nuclear awards highlights demand for decarbonization infrastructure.
- Aftermarket Dominance: Flowserve’s aftermarket revenue now accounts for 60% of bookings, a recurring revenue stream with higher margins.
- Strategic Acquisitions: Standex’s Amran/Narayan and Flowserve’s MOGAS acquisition added scale and exposure to fast-growth markets.

Challenges:
- Tariffs and Trade Uncertainty: Flowserve noted tariffs as a 220 basis point drag on sales growth, while Ingersoll Rand cited macroeconomic volatility as a key headwind.
- Currency Fluctuations: Foreign exchange reduced Flowserve’s YoY growth by 100–200 basis points, a sector-wide issue.

Conclusion: Flowserve’s Momentum and the Sector’s Outlook

Flowserve’s Q1 results underscore its position as a leader in the gas and liquid handling sector. With a $2.9 billion backlog, 24% adjusted EPS growth, and margin expansion, the company is well-positioned to navigate tariffs and currency risks through operational discipline.

Peers like Standex and IDEX further validate the sector’s resilience, with average peer stock gains of 9.1% post-earnings. However, companies like Ingersoll Rand highlight the need for agility amid macroeconomic volatility.

Investors should prioritize firms with strong aftermarket exposure (e.g., Flowserve, IDEX) and diversified end markets (e.g., Standex’s renewables/defense plays). Flowserve’s reaffirmed $3.10–$3.30 2025 adjusted EPS guidance and 5–7% revenue growth targets make it a compelling play on industrial recovery, provided geopolitical risks remain contained.

In a sector where execution and innovation rule, Flowserve’s Q1 performance sets a high bar—and investors are taking notice.