Can Xylem (XYL) Retain Beat Streak This Earnings Season?
Xylem Inc. XYL is scheduled to release third-quarter 2023 results on Oct 31, before market open.
The company has a stellar earnings surprise history, having outperformed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 16.5%.
Let’s see how things have shaped up for Xylem this earnings season.
Xylem Inc. Price and EPS Surprise
Xylem Inc. price-eps-surprise | Xylem Inc. Quote
Factors to Note
Resiliency across the utilities and industrial water applications end markets is expected to drive Xylem’s third-quarter results.
The Measurement & Control Solutions (M&CS) segment is benefiting from improving supply chains and strong demand for pipeline assessment services. The Zacks Consensus Estimate for M&CS segment’s revenues indicates a 17.8% jump from the year-ago reported number.
Growth in the developed and emerging markets is boosting the Water Infrastructure segment’s performance. The consensus mark for Water Infrastructure segment’s revenues suggests an approximate 32% surge from the year-ago reported figure.
Strong price realization and backlog execution in the United States and emerging markets are key catalysts to the Applied Water segment’s growth. However, weakness in the residential end market has lately been weighing on the unit. The Zacks Consensus Estimate for Applied Water segment’s revenues hints at a muted increase of 1.1% from the year-ago reported number.
The Evoqua acquisition (May 2023), which has expanded Xylem’s position in water technologies, solutions and services and strengthened its foothold in lucrative end markets, is expected to bolster its top-line results in the to-be-reported number.
However, Xylem’s bottom line may reflect the impact of raw material cost inflation and high labor, freight and overhead costs. Unfavorable foreign currency movements may also affect the company’s earnings and revenues.
Earnings Whispers
Our proven model does not conclusively 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 odds of an earnings beat, which is not the case here, as elaborated below.
Earnings ESP: Xylem has an Earnings ESP of -0.62% as the Most Accurate Estimate is pegged at 88 cents, lower than the Zacks Consensus Estimate of 89 cents. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: Xylem presently carries a Zacks Rank of 3.
Highlights of Q2 Earnings
Xylem’s second-quarter 2023 adjusted earnings of 98 cents per share surpassed the Zacks Consensus Estimate of 85 cents. The bottom line increased significantly year over year. Total revenues of $1,722 million outperformed the Zacks Consensus Estimate of $1,672.2 million and rose 26.3% year over year. Benefits from the Evoqua acquisition and strong commercial and operational execution drove the top line.
Stocks to Consider
Here are some companies within the broader Industrial Products sector, which according to our model, have the right combination of elements to beat on earnings this reporting cycle.
Stanley Black & Decker SWK has an Earnings ESP of +1.84% and a Zacks Rank #2. The company is scheduled to release third-quarter results on Oct 27. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stanley Black pulled off a trailing four-quarter earnings surprise of 47.2%, on average. The stock has gained 2.6% in a year.
Tenaris TS has an Earnings ESP of +1.42% and a Zacks Rank #3. The company is slated to release third-quarter results on Nov 1.
Tenaris delivered a trailing four-quarter earnings surprise of 7.7%, on average. The stock has rallied 8.5% in a year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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