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Xylem Wins Bahrain Contract, Outlook Solid on Order Backlog

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Xylem Inc. (XYL) has recently been awarded a multi-million dollar contract by Bahrain’s Ministry of Works. The $7.3 million contract win reflects the growing popularity of the company’s world-class water and wastewater solutions, which is boosting its revenue-generation capabilities.

Per the terms of the contract, Xylem will upgrade and expand Wedeco ozone systems at the Tubli Water Pollution Control Centre (:TWPCC) in Manama. Following the upgrade, the facility’s water treatment capacity will increase to 240,000 from 200,000 cubic meters, making it the largest ozone waste-water treatment facility in the Middle East.

Xylem anticipates completing the contract in 16 months, with the plant likely to be operational by 2015 end.

Barely a month ago, Xylem won a contract in Thailand to supply Flygt-brand pumps to the Xayaburi run-of-river hydropower dam. A similar contract, to provide Flygt-brand submersible pumps, was awarded to the company in Jun 2014 at Paris, France.

With such diversified and high-value contracts in the pipeline, Xylem is expected to gain market share and generate higher organic revenues in the quarters ahead. In second-quarter 2014, the company received total orders worth $1,031 million, reflecting a year-over-year increase of 1%, while total backlog was $816 million at quarter-end.

For 2014, Xylem anticipates revenues to be roughly $4.0 billion, up 2–4% year over year. Adjusted net income and earnings per share are expected in ranges of $350–$370 million and $1.90–$2.00, respectively.   

The Zacks Consensus Estimate for Xylem is pegged at $1.96 for 2014 and $2.26 for 2015. These estimates represent year-over-year growth of 17.2% and 15.7% respectively. Also, earnings over the next five years are estimated to grow by 12.6%.

With a market capitalization of $6.9 billion, Xylem currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include DXP Enterprises, Inc. (DXPE), IDEX Corporation (IEX) and Middleby Corp. (MIDD). All these stocks hold a Zacks Rank #2 (Buy).

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