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Reasons Why it is Worth Investing in Xylem (XYL) Stock Now
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Xylem Inc. (XYL - Free Report) seems to be an attractive option for investors seeking exposure in the general industrial manufacturing space. Solid fundamentals along with sound financial performance and an increase in projections enhance the stock’s attractiveness.
The company, with a market capitalization of $21.4 billion, engages in providing water solutions worldwide. It presently has a Zacks Rank #2 (Buy). The company belongs to the Zacks Manufacturing – General Industrial industry, which comes under the ambit of the Zacks Industrial Products sector. The industry is among the top 28% (with the rank of 69) of more than 250 Zacks industries.
In the past three months, the company’s shares have gained 18.2% compared with the industry’s growth of 10.2%. Notably, the S&P 500 expanded 9.1%, while the sector advanced 4.8% in the same timeframe.
Image Source: Zacks Investment Research
Below we discussed why Xylem is a worthy investment option.
Earnings Performance and Projections: The company reported impressive results for first-quarter 2021. Its earnings surpassed the Zacks Consensus Estimate by 51.4% and sales surprise was 7.1%. On a year-over-year basis, its earnings grew 143.5%, owing to sales and margin growth.
In the quarters ahead, the company is poised to benefit from solid product offerings as well as backlog, contract wins, innovation capabilities and efforts to boost operational excellence. Also, its cost-saving actions are compelling. For 2021, Xylem anticipates adjusted earnings of $2.50-$2.70 per share, higher than the previously mentioned $2.35-$2.60. Revenues are projected to grow 8-10% year over year, higher than the previously mentioned 6-8%. Likewise, organic sales are expected to increase 5-7% as compared with 3-5% stated earlier.
Diversified Structure: Xylem has exposure in multiple end-markets, including industrial, utilities and others. Such diversification helps it offset weakness in one or multiple markets with strength in others.
In the industrial market, revival in the industrial dewatering business, healthy growth in business in emerging markets and Europe, and improving industrial activities are likely to be beneficial in 2021. Also, favorable wastewater utilities business as well as healthy projects and infrastructure planning are likely to aid businesses in the utilities market. Also, growth in European and clean water utilities businesses are other tailwinds.
In the residential market, healthy demand in China and growth in businesses in Europe and the United States are likely to be beneficial. Then again, growth in business in Europe will likely be advantageous in the commercial market.
Shareholders’ Rewards: Dividend payouts and share buybacks have been Xylem’s preferred way of rewarding its shareholders. In first-quarter 2021, the company distributed dividends of $51 million to its shareholders, reflecting an increase of 6.3% from the comparable quarter a year ago. Notably, it announced a hike of 8% in its quarterly dividend rate this February.
In addition, the company repurchased shares worth $67 million in the first quarter, reflecting a year-over-year increase of 11.7%. A healthy cash flow position will likely help it reward its shareholders.
Earnings Estimate Revisions: The company’s earnings estimates have increased in the past 60 days. Currently, the Zacks Consensus Estimate for earnings is pegged at 62 cents for the second quarter of 2021, reflecting an increase of 5.1% from the 60-day-ago figure.
Also, earnings estimates are pegged at $2.72 for 2021 and $3.28 for 2022, suggesting increases of 6.2% and 5.5% from the 60-day-ago figures, respectively.
In the past 60 days, earnings estimates for the stocks have improved for the current year. Further, earnings surprise for the last reported quarter was 82.81% for Tennant, 35.64% for Applied Industrial and 44.21% for EnPro Industries.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Bigstock
Reasons Why it is Worth Investing in Xylem (XYL) Stock Now
Xylem Inc. (XYL - Free Report) seems to be an attractive option for investors seeking exposure in the general industrial manufacturing space. Solid fundamentals along with sound financial performance and an increase in projections enhance the stock’s attractiveness.
The company, with a market capitalization of $21.4 billion, engages in providing water solutions worldwide. It presently has a Zacks Rank #2 (Buy). The company belongs to the Zacks Manufacturing – General Industrial industry, which comes under the ambit of the Zacks Industrial Products sector. The industry is among the top 28% (with the rank of 69) of more than 250 Zacks industries.
In the past three months, the company’s shares have gained 18.2% compared with the industry’s growth of 10.2%. Notably, the S&P 500 expanded 9.1%, while the sector advanced 4.8% in the same timeframe.
Below we discussed why Xylem is a worthy investment option.
Earnings Performance and Projections: The company reported impressive results for first-quarter 2021. Its earnings surpassed the Zacks Consensus Estimate by 51.4% and sales surprise was 7.1%. On a year-over-year basis, its earnings grew 143.5%, owing to sales and margin growth.
In the quarters ahead, the company is poised to benefit from solid product offerings as well as backlog, contract wins, innovation capabilities and efforts to boost operational excellence. Also, its cost-saving actions are compelling. For 2021, Xylem anticipates adjusted earnings of $2.50-$2.70 per share, higher than the previously mentioned $2.35-$2.60. Revenues are projected to grow 8-10% year over year, higher than the previously mentioned 6-8%. Likewise, organic sales are expected to increase 5-7% as compared with 3-5% stated earlier.
Diversified Structure: Xylem has exposure in multiple end-markets, including industrial, utilities and others. Such diversification helps it offset weakness in one or multiple markets with strength in others.
In the industrial market, revival in the industrial dewatering business, healthy growth in business in emerging markets and Europe, and improving industrial activities are likely to be beneficial in 2021. Also, favorable wastewater utilities business as well as healthy projects and infrastructure planning are likely to aid businesses in the utilities market. Also, growth in European and clean water utilities businesses are other tailwinds.
In the residential market, healthy demand in China and growth in businesses in Europe and the United States are likely to be beneficial. Then again, growth in business in Europe will likely be advantageous in the commercial market.
Shareholders’ Rewards: Dividend payouts and share buybacks have been Xylem’s preferred way of rewarding its shareholders. In first-quarter 2021, the company distributed dividends of $51 million to its shareholders, reflecting an increase of 6.3% from the comparable quarter a year ago. Notably, it announced a hike of 8% in its quarterly dividend rate this February.
In addition, the company repurchased shares worth $67 million in the first quarter, reflecting a year-over-year increase of 11.7%. A healthy cash flow position will likely help it reward its shareholders.
Earnings Estimate Revisions: The company’s earnings estimates have increased in the past 60 days. Currently, the Zacks Consensus Estimate for earnings is pegged at 62 cents for the second quarter of 2021, reflecting an increase of 5.1% from the 60-day-ago figure.
Xylem Inc. Price and Consensus
Xylem Inc. price-consensus-chart | Xylem Inc. Quote
Also, earnings estimates are pegged at $2.72 for 2021 and $3.28 for 2022, suggesting increases of 6.2% and 5.5% from the 60-day-ago figures, respectively.
Other Key Picks
Some other top-ranked stocks in the industry are Tennant Company (TNC - Free Report) , Applied Industrial Technologies, Inc. (AIT - Free Report) and EnPro Industries, Inc. (NPO - Free Report) . While Tennant currently sports a Zacks Rank #1 (Strong Buy), both Applied Industrial and EnPro carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, earnings estimates for the stocks have improved for the current year. Further, earnings surprise for the last reported quarter was 82.81% for Tennant, 35.64% for Applied Industrial and 44.21% for EnPro Industries.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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