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Xylem Wins $1.87M Chinese Contract

Zacks Equity Research

Xylem Inc. (XYL), one of the leading providers of innovative solutions for global water challenges, has received the largest ozone contract in China. The contract entails the company to supply an ozone generation and introduction system, which will provide a safe municipal water supply in Jinshan, Shanghai. The contract is worth roughly $1.87 million (RMB 11.48 million).

As per the contract, Xylem will provide the water plant with WEDECO-branded ozone generation and introduction system. The plant with a capacity of 400,000 tons of water per day will also be equipped with Xylem’s integrated service package — TotalCareSM.

This contract complements the company's effort to expand its global footprint. Earlier this month, Xylem received a contract to provide wastewater services in Tolu, a town located on the Caribbean coast of Colombia. Per the contract, Xylem will be required to set up a secondary wastewater treatment solution that will help eliminate the odor and increase the quality of the wastewater which can then be used for a number of applications.

The company has been successful in gaining international contracts this year. Year to date, Xylem has also received contracts in United Arab Emirates, Sweden and Beijing.

Xylem reported dismal results for the second quarter of 2013, with a year-over-year slump of 27% in earnings per share to 36 cents, as a result of lower revenues and higher costs. The Zacks Consensus Estimate for 2013 has dropped 21.4% in the last 60 days to $1.43 per share. For 2014, the Zacks Consensus Estimate declined 18.8% during the same period to $1.69 per share.

Xylem currently carries a Zacks Rank #5 (Strong Sell). Other stocks worth a look in the industry include EnPro Industries, Inc. (NPO), The Middleby Corporation (MIDD) and Altra Holdings, Inc. (AIMC). While EnPro Industries carries a Zacks Rank #1 (Strong Buy), Middleby and Altra Holdings carry a Zacks Rank #2 (Buy).

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