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Shares of Xylem Inc. (XYL - Analyst Report) touched a new 52-week high of $34.93 during its trading session on Nov 20. This is an increase from the previous high of $34.66 reached on Oct 31.

Xylem closed on Nov 20 at $34.30, reflecting a solid year-to-date return of 26.8%. The trading volume for the session was 1.38 million shares. The water solutions provider company, with a Zacks Rank #1 (Strong Buy) has potential for further accretion. This is reflected by both its earnings growth rate (8.1% over the next five years) and earnings estimate revision for 2014.

Growth Drivers

Xylem’s results in the third quarter of 2013 were impressive. Adjusted earnings per share came in at 49 cents, up 11% from the year-ago quarter and 40% above the Zacks Consensus Estimate of 35 cents. Since the earnings release on Oct 29, shares have risen 18.6%.

In the third quarter, revenues grew 4% year over year to $965 million. The improvement was a result of increased demand in emerging markets as well as better-than-expected demand in Europe.

The company received many important contracts in the quarter, in regions including China, Columbia and the United Arab Emirates. In third-quarter 2013, total orders climbed 8% year over year to $955 million, on a constant currency basis.

For 2013, management has revised upwards its guidance. Revenues are expected to be $3.8 billion, up from the previous expectation of $3.7 billion. Earnings per share are estimated in the range of $1.60–$1.65, compared with $1.40–$1.50 projected earlier.

Also, Xylem has an average surprise of 5.1% in the trailing four quarters. For 2014, the company has an Earnings ESP of +2.72%.

Estimate Revisions Show Potency

Over the last 30 days, the Zacks Consensus Estimate for Xylem has increased by 14.0% to $1.63 for 2013 while gained 9.5% to $1.84 for 2014.

Xylem currently has a market capitalization of $6.3 billion. Other stocks to watch out for in the industry are Graham Corp. (GHM - Snapshot Report), DXP Enterprises, Inc. (DXPE - Snapshot Report) and Flowserve Corp. (FLS - Analyst Report). All of these have a Zacks Rank #2 (Buy).

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