CIRCOR's (CIR) Warning Has Negative Read-Through to Other Value Makers - RBC (FLOW) (FLS) (EMR) (PNR)

October 6, 2016 1:49 PM EDT
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RBC Capital analyst Deane Dray said he sees a negative read-across from value maker CIRCOR's (NYSE: CIR) negative announcement to SPX Flow (NYSE: FLOW), Flowserve (NYSE: FLS), Emerson Electric (NYSE: EMR) and to a letter extent Pentair (NYSE: PNR).

"This news has some negative read-across to valve makers with meaningful oil exposure in our coverage, "Dray said. "This includes SPX FLOW (direct oil & gas is 21% of sales), Pentair (17%), Flowserve (43%), and Emerson (25%; in the process of acquiring Pentair’s Valves & Controls business), and you can see most of those stocks trading lower in sympathy despite crude oil being up roughly 1%. CIRCOR cited “prolonged weakness in the Energy markets across both short-cycle and long-cycle businesses” as the key driver of the shortfall, though there were also some company-specific supplier quality issues highlighted that should not impact our coverage."

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