Xylem Inc (NYSE:XYL): What Are The Future Prospects?
Xylem Inc’s (NYSE:XYL) latest earnings update in September 2017 revealed that the business faced a immense headwind with earnings deteriorating by -23.53%. Below, I’ve presented key growth figures on how market analysts perceive Xylem’s earnings growth trajectory over the next couple of years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in. View our latest analysis for Xylem
Market analysts’ consensus outlook for the coming year seems buoyant, with earnings rising by a significant 50.91%. This high growth in earnings is expected to continue, bringing the bottom line up to $611.6M by 2020.
Although it is useful to be aware of the growth year by year relative to today’s level, it may be more insightful to evaluate the rate at which the company is moving on average every year. The benefit of this method is that we can get a better picture of the direction of Xylem’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I’ve inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 18.86%. This means that, we can assume Xylem will grow its earnings by 18.86% every year for the next couple of years.
Next Steps:
For Xylem, there are three relevant aspects you should further research:
1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
2. Valuation: What is XYL worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether XYL is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of XYL? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
