Shares of Xylem Inc. (XYL - Free Report) have declined since the beginning of 2020. We believe that the price decline mainly reflects the adverse impacts of the pandemic. Also, exposure to other headwinds — including forex woes and cost inflation — must have played spoilsport.
The Rye Brook, NY-based company belongs to the Zacks Manufacturing – General Industrial industry, which, in turn, comes under the ambit of the Zacks Industrial Products sector. The industry is currently at the bottom 26% (with the rank of 187) of more than 250 Zacks industries.
Year to date, the company’s shares have fallen 19% compared with the industry’s and the sector’s declines of 17.1% and 15.5%, respectively. Notably, the S&P 500 has lost just 6.7% during the same period.
The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Factors Affecting the Stock
The coronavirus outbreak is impacting Xylem’s operations and end markets. For instance, its organic sales in first-quarter 2020 decreased 8% year over year, with 5% being due to the pandemic. The company expects organic sales to decline 20-30% year over year in the second quarter.
For 2020, Xylem kept its projections suspended (that was originally withdrawn on Mar 31, 2020). The company believes that end-market operations, especially in residential and commercial, will be adversely impacted by the pandemic-led woes. Also, delays in capital projects and difficulties in execution as well as labor-market problems might hurt the utilities business. Further, weakness in beverage dispensing, applied water, marine and dewatering businesses might be a spoilsport for the industrial market.
In addition to the coronavirus woes, Xylem is exposed to risks (such as geopolitical uncertainties and unfavorable movements in foreign currencies) emanating from its international operations. Also, cost inflation and woes related to strategic investments might continue to hurt margins. For instance, cost inflation lowered first-quarter operating margin by 260 bps, while the pandemic and strategic investments hurt margin by 150 bps and 60 bps, respectively.
Currently, the Zacks Consensus Estimate for the company’s earnings is pegged at $1.42 for 2020 and $2.50 for 2021, marking declines of 46.4% and 19.9% from the respective 60-day-ago figures. Notably, there have been eight downward revisions in estimates for 2020 (versus none upward) and six for 2021 (versus one upward revision). The consensus estimate for the second quarter has declined 92.9% to 4 cents per share in the past 60 days. Notably, there were seven downward revisions for the quarter.
Xylem Inc. Price and Consensus
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From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
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Shares of Xylem Inc. (XYL - Free Report) have declined since the beginning of 2020. We believe that the price decline mainly reflects the adverse impacts of the pandemic. Also, exposure to other headwinds — including forex woes and cost inflation — must have played spoilsport.
The Rye Brook, NY-based company belongs to the Zacks Manufacturing – General Industrial industry, which, in turn, comes under the ambit of the Zacks Industrial Products sector. The industry is currently at the bottom 26% (with the rank of 187) of more than 250 Zacks industries.
Year to date, the company’s shares have fallen 19% compared with the industry’s and the sector’s declines of 17.1% and 15.5%, respectively. Notably, the S&P 500 has lost just 6.7% during the same period.
The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Factors Affecting the Stock
The coronavirus outbreak is impacting Xylem’s operations and end markets. For instance, its organic sales in first-quarter 2020 decreased 8% year over year, with 5% being due to the pandemic. The company expects organic sales to decline 20-30% year over year in the second quarter.
For 2020, Xylem kept its projections suspended (that was originally withdrawn on Mar 31, 2020). The company believes that end-market operations, especially in residential and commercial, will be adversely impacted by the pandemic-led woes. Also, delays in capital projects and difficulties in execution as well as labor-market problems might hurt the utilities business. Further, weakness in beverage dispensing, applied water, marine and dewatering businesses might be a spoilsport for the industrial market.
In addition to the coronavirus woes, Xylem is exposed to risks (such as geopolitical uncertainties and unfavorable movements in foreign currencies) emanating from its international operations. Also, cost inflation and woes related to strategic investments might continue to hurt margins. For instance, cost inflation lowered first-quarter operating margin by 260 bps, while the pandemic and strategic investments hurt margin by 150 bps and 60 bps, respectively.
Currently, the Zacks Consensus Estimate for the company’s earnings is pegged at $1.42 for 2020 and $2.50 for 2021, marking declines of 46.4% and 19.9% from the respective 60-day-ago figures. Notably, there have been eight downward revisions in estimates for 2020 (versus none upward) and six for 2021 (versus one upward revision). The consensus estimate for the second quarter has declined 92.9% to 4 cents per share in the past 60 days. Notably, there were seven downward revisions for the quarter.
Xylem Inc. Price and Consensus
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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