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Xylem (XYL) to Report Q1 Earnings: What's in the Offing?

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Zacks Equity Research
·4 min read
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Xylem Inc. XYL is scheduled to release first-quarter 2020 results on May 5, before market open.

The company witnessed weaker-than-expected results in one of the trailing four quarters, while recording in-line results in the others. Earnings surprise was a negative 2.59%, on average. In the last reported quarter, the company’s earnings of 89 cents met the Zacks Consensus Estimate.

In the past three months, shares of this water solutions provider have moved down 13.8% compared with the industry’s decline of 16.9%.


Let us delve deeper.

Key Factors & Estimates for Q1

The coronavirus outbreak and its impacts on industrial markets are expected to have hurt Xylem’s operations — especially its supply chain and commercial activities — in the first quarter of 2020. Due to the prevalent uncertainties, the company withdrew (in March) its previously provided projections for the quarter.

In addition, forex woes and cost inflations have been adversely impacting the company’s results for the past few quarters.

However, good cash reserves and a healthy balance sheet as well as cost-management efforts might have helped. Also, a healthy product portfolio, investments made to expand the business in different geographies, and gains from restructuring actions are expected to get reflected on the quarter’s results.

The Zacks Consensus Estimate for first-quarter revenues of $1,143 million suggests a 7.6% dip from the year-ago reported figure and a 16.6% decline from the previous quarter.

The estimate for earnings is pegged at 37 cents per share, suggesting declines of 28.8% from the year-ago quarter’s reported figure and a 58.4% fall from the fourth quarter of 2019.

On a segmental basis, weakness in the dewatering business in North America is expected to have adversely impacted results for Water Infrastructure. Applied Water segment’s results in the quarter are expected to reflect the impacts of weak orders and shippable backlogs.

For the Water Infrastructure segment, the Zacks Consensus Estimate for revenues is pegged at $446 million, implying a 7.5% slip from the figure reported a year ago and a 26% decline from the sequential quarter. The revenue estimate for Applied Water is pegged at $363 million, suggesting declines of 4.2% and 7.4% from the year-ago quarter’s reported figure and the previous quarter, respectively.

Also, Measurement & Control Solutions’ revenue estimate is pegged at $362 million, suggesting a 3.7% decline both on a year-over-year and sequential basis.

Earnings Whispers

Our proven model doesn’t predict an earnings beat for Xylem this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Xylem has an Earnings ESP of -2.01%.

Xylem Inc. Price, Consensus and EPS Surprise


Xylem Inc. Price, Consensus and EPS Surprise
Xylem Inc. Price, Consensus and EPS Surprise

Xylem Inc. price-consensus-eps-surprise-chart | Xylem Inc. Quote

Zacks Rank: Xylem currently carries a Zacks Rank #4 (Sell).

Stocks to Consider

Here are some companies that you may want to consider as according to our model, these have the right combination of elements to beat on earnings this reporting cycle:

Intellicheck, Inc. IDN presently has an Earnings ESP of +66.67% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Astec Industries, Inc. ASTE currently has an Earnings ESP of +6.52% and is Zacks #3 Ranked.

Nordson Corporation NDSN currently has an Earnings ESP of +1.17% and a Zacks Rank #3.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

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