We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
On Sep 19, 2016, we issued an updated research report on premium diversified machinery company, Xylem Inc. (XYL - Free Report) . The company boasts of unique engineering services widely used in different wastewater and water applications. Since its inception, Xylem has been successfully expanding the scale of its business across international markets like the Asia Pacific, Europe and the U.S. However, the company is currently facing certain headwinds that may partially limit its upside potential.
Bullish Factors
Xylem’s public utility sector’s business has been gaining strength over time. This improvement is largely attributable to rise in demand for its wastewater and water infrastructure services, especially in the U.S. Moreover, the company aims to drive its financials on the back of lucrative business acquisitions.
For instance, the Tideland Signal Corporation buyout in Feb 2016 is reinforcing the company’s sales in the coastal and ocean markets. Also, the deal to purchase Sensus, signed in August, is expected to boost Xylem’s aggregate earnings from 2017 onward.
Xylem constantly intends to grow its business on the back of increased backlogs, volumes, greater cost discipline and strategic initiatives for operational enhancement. Based on these positives, the company anticipates generating total revenues worth $3.7 billion in full-year 2016, with an estimated year-over-year organic sales growth of 2–3%.
Existing Issues
Weak prices of energy resources like oil are currently affecting the revenues generated by manufacturing and industrial companies such as Xylem. Choppy oil prices have been directly hurting the oil companies’ sales and, hence, significantly reducing the extent of Greenfield investments made within the sector. As a result, lower investments made by oil companies have depressed the sales generated by producers of heavy equipment, machinery parts and steel.
Moreover, greater globalization exposes Xylem to several political, environmental, economic and legal headwinds. Even so, each business segment of the company faces stiff competition within the industry. Extensive business rivalry increases the bargaining power of customers, exposing the company to risks of market share loss. The appreciating U.S. dollar is enhancing the competitive power of smaller companies operating in low-cost nations, thus increasing revenue and margin loss risks for Xylem.
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Xylem's (XYL) Growth Prospects Bright Despite Macro Risks
On Sep 19, 2016, we issued an updated research report on premium diversified machinery company, Xylem Inc. (XYL - Free Report) . The company boasts of unique engineering services widely used in different wastewater and water applications. Since its inception, Xylem has been successfully expanding the scale of its business across international markets like the Asia Pacific, Europe and the U.S. However, the company is currently facing certain headwinds that may partially limit its upside potential.
Bullish Factors
Xylem’s public utility sector’s business has been gaining strength over time. This improvement is largely attributable to rise in demand for its wastewater and water infrastructure services, especially in the U.S. Moreover, the company aims to drive its financials on the back of lucrative business acquisitions.
For instance, the Tideland Signal Corporation buyout in Feb 2016 is reinforcing the company’s sales in the coastal and ocean markets. Also, the deal to purchase Sensus, signed in August, is expected to boost Xylem’s aggregate earnings from 2017 onward.
Xylem constantly intends to grow its business on the back of increased backlogs, volumes, greater cost discipline and strategic initiatives for operational enhancement. Based on these positives, the company anticipates generating total revenues worth $3.7 billion in full-year 2016, with an estimated year-over-year organic sales growth of 2–3%.
Existing Issues
Weak prices of energy resources like oil are currently affecting the revenues generated by manufacturing and industrial companies such as Xylem. Choppy oil prices have been directly hurting the oil companies’ sales and, hence, significantly reducing the extent of Greenfield investments made within the sector. As a result, lower investments made by oil companies have depressed the sales generated by producers of heavy equipment, machinery parts and steel.
Moreover, greater globalization exposes Xylem to several political, environmental, economic and legal headwinds. Even so, each business segment of the company faces stiff competition within the industry. Extensive business rivalry increases the bargaining power of customers, exposing the company to risks of market share loss. The appreciating U.S. dollar is enhancing the competitive power of smaller companies operating in low-cost nations, thus increasing revenue and margin loss risks for Xylem.
Stocks to Consider
Xylem currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks within the industry include DXP Enterprises, Inc. (DXPE - Free Report) , Gorman-Rupp Co. (GRC - Free Report) and Nordson Corp. (NDSN - Free Report) . All the three companies currently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>