What happened

Shares of Flowserve (NYSE:FLS) stock are down 10.3% as of 3:30 p.m. EDT.

So what

Flowserve, which both manufactures and distributes industrial flow-management equipment, reported its fiscal second-quarter 2017 earnings this morning. The company reported $0.32 per share in profits -- which was bad enough, because that was 44% below last year's $0.57 per share. What made it worse was that Flowserve said its earnings were inflated by $0.10 in one-time benefits and that, adjusted to back out those benefits, earnings would have been only $0.22 per share. Wall Street had been expecting adjusted earnings of $0.44 -- twice what Flowserve actually produced.

Sales for the quarter, meanwhile, came in at only $877.1 million, far below consensus expectations of $926.2 million, and down 15% year over year.

Water circling the drain

Investors may not want to go with this flow. Image source: Getty Images.

Now what

Unfortunately, Q2's numbers were only part of the bad news. When all's said and done, Flowserve expects to see its full-year sales decline between 6% and 10% by year-end. Updating its guidance to account for this, Flowserve now says investors can expect to see it earn only between $0.85 and $1.05 per share by year-end. (Pro forma profits will range from $1.30 to $1.50.)

Given that Flowserve earned $1.11 last year, that works out to roughly a 15% decline in earnings year over year. The fact that investors are only selling off Flowserve by 10% or so today, therefore, suggests there may be more pain to come if Flowserve's disappointing guidance turns out to be correct.

At more than 43 times what the company expects to earn this year, Flowserve shares are priced for a perfection that it's very unlikely to achieve.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.