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Shares of Xylem Inc. (XYL - Analyst Report) reached a new 52-week high of $39.07 during its trading session on Feb 21. This marks a nominal increase from the previous high of $38.79 hit a day ago.

Xylem closed the trading day on Feb 21 at $38.86, reflecting a solid return of 42.7% in the past one year. The trading volume for the session was 1,321K shares. The water solutions provider company, with a Zacks Rank #2 (Buy), has potential for further accretion. This is reflected in both its expected earnings growth rate of 6.7% over the next five years and earnings estimate revision for 2014.

Growth Drivers

Xylem posted impressive results for the fourth quarter of 2013. Adjusted earnings per share came in at 56 cents, up 19% from the year-ago quarter and roughly 8% above the Zacks Consensus Estimate of 52 cents. Shares have risen 11.5% after the results were announced on Feb 4.

In the fourth quarter, revenues grew 7% year over year to $1.03 billion. The increase in revenues was a result of improved demand in the industrial and public utility markets.

The company received many important contracts during the quarter, in regions including New Jersey, Colombia and different parts of Asia. During the quarter, Xylem received total orders worth $986 million, reflecting a hike of 6% year over year, on a constant currency basis.

Based on the strong results for the quarter, Xylem expects 2014 results to be more growth driven. Revenues in 2014 are expected to be roughly $4.0 billion, up 2–4% year over year. Adjusted net income is estimated in the range of $345 to $370 million, with earnings per share in the range of $1.85 to $2.00.

Following the results, the Zacks Consensus Estimate for 2014 and 2015 increased 2.1% to $1.96 per share and 4.7% to $2.24 per share, respectively, in the past 30 days. Also, Xylem has an average surprise of 6.5% in the trailing four quarters.

Other Stocks to Consider

Xylem currently has a market capitalization of $7.2 billion. Other stocks to watch out for in the industry include Altra Industrial Motion Corp. (AIMC - Snapshot Report), Graco Inc. (GGG - Snapshot Report) and The Middleby Corporation (MIDD - Analyst Report). All these stocks carry the same Zacks Rank as Xylem.

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