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Xylem Inc. (XYL - Free Report) at its Investor Day held on Sep 30 talked about the long-term prospects and provided an update on its 2021 projections. The company also highlighted its digital capabilities and the introduction of Xylem Vue.
In the last two trading days, shares of the water technology provider have declined 5.1%. It ended the trading session on Friday at $121.30.
Inside the Headlines
The company noted that healthy demand for digital water solutions is key to its growth prospects. This along with sound management, expansion in emerging markets and efforts to enhance shareholder value are beneficial. Its digital capabilities are getting stronger, with revenue contribution from the same likely to reach 50% of Xylem’s sales by 2025. Xylem Vue, the company’s digital ecosystem, is predicted to aid growth prospects.
For the long term, Xylem’s core pillars include increasing water’s digital transformation and customer experience, retention of talent, expansion in underserved markets and local regions, cost management and building healthy supply chains, and strengthen digital infrastructure and core portfolio. Between 2021 and 2025, the company anticipates high-single-digit growth (CAGR) in utilities, a low to mid-single-digit increase in industrial, and a low to mid-single-digit expansion in the commercial/residential markets.
On a segmental basis, Water Infrastructure revenues are predicted to increase in mid-single digits (CAGR) between 2021 and 2025. The same for Applied Water is expected to increase in low to mid-single digits, and that for Measurement & Control Solutions is likely to expand in high-single digits.
The company noted that the prevailing difficult supply-chain environment (mostly related to the availability of electronic components) is likely to adversely impact its revenues by $100 million in the second half of 2021. Orders are likely to be solid for the period. The company is slated to release its third-quarter results on Nov 2, 2021.
A snapshot of projections provided along with the second-quarter results in August is provided below:
For 2021, the company predicted year-over-year organic revenue growth of 6-8%. Total revenues are predicted to increase 9-11% to $5.3-$5.4 billion. Adjusted earnings per share are anticipated to be $2.55-$2.70 for the year. The adjusted EBITDA margin is expected to be 17.2-17.7% and free cash flow conversion is likely to be 80-90%.
Zacks Rank, Price Performance and Earnings Estimates
The company currently has a market capitalization of $21.9 billion and a Zacks Rank #4 (Sell). An increase in costs related to raw materials, freight, labor, and investments is concerning for the company.
In the past three months, the company’s shares have gained 0.3% against the industry’s decline of 7.4%.
Image Source: Zacks Investment Research
In the past 60 days, the company’s earnings estimates have decreased 4.7% to $2.62 for 2021 and 2.7% to $3.21 for 2021. The same for the third quarter has decreased 11.3% to 63 cents in the past couple of months.
In the past 60 days, earnings estimates for the companies improved for the current year. Further, earnings surprise for the last reported quarter was 14.15% for Nordson, 33.11% for Kadant and 25.81% for EnPro.
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Xylem (XYL) Provides Long-Term View, Updates '21 Projections
Xylem Inc. (XYL - Free Report) at its Investor Day held on Sep 30 talked about the long-term prospects and provided an update on its 2021 projections. The company also highlighted its digital capabilities and the introduction of Xylem Vue.
In the last two trading days, shares of the water technology provider have declined 5.1%. It ended the trading session on Friday at $121.30.
Inside the Headlines
The company noted that healthy demand for digital water solutions is key to its growth prospects. This along with sound management, expansion in emerging markets and efforts to enhance shareholder value are beneficial. Its digital capabilities are getting stronger, with revenue contribution from the same likely to reach 50% of Xylem’s sales by 2025. Xylem Vue, the company’s digital ecosystem, is predicted to aid growth prospects.
For the long term, Xylem’s core pillars include increasing water’s digital transformation and customer experience, retention of talent, expansion in underserved markets and local regions, cost management and building healthy supply chains, and strengthen digital infrastructure and core portfolio. Between 2021 and 2025, the company anticipates high-single-digit growth (CAGR) in utilities, a low to mid-single-digit increase in industrial, and a low to mid-single-digit expansion in the commercial/residential markets.
On a segmental basis, Water Infrastructure revenues are predicted to increase in mid-single digits (CAGR) between 2021 and 2025. The same for Applied Water is expected to increase in low to mid-single digits, and that for Measurement & Control Solutions is likely to expand in high-single digits.
The company noted that the prevailing difficult supply-chain environment (mostly related to the availability of electronic components) is likely to adversely impact its revenues by $100 million in the second half of 2021. Orders are likely to be solid for the period. The company is slated to release its third-quarter results on Nov 2, 2021.
A snapshot of projections provided along with the second-quarter results in August is provided below:
For 2021, the company predicted year-over-year organic revenue growth of 6-8%. Total revenues are predicted to increase 9-11% to $5.3-$5.4 billion. Adjusted earnings per share are anticipated to be $2.55-$2.70 for the year. The adjusted EBITDA margin is expected to be 17.2-17.7% and free cash flow conversion is likely to be 80-90%.
Zacks Rank, Price Performance and Earnings Estimates
The company currently has a market capitalization of $21.9 billion and a Zacks Rank #4 (Sell). An increase in costs related to raw materials, freight, labor, and investments is concerning for the company.
In the past three months, the company’s shares have gained 0.3% against the industry’s decline of 7.4%.
In the past 60 days, the company’s earnings estimates have decreased 4.7% to $2.62 for 2021 and 2.7% to $3.21 for 2021. The same for the third quarter has decreased 11.3% to 63 cents in the past couple of months.
Xylem Inc. Price and Consensus
Xylem Inc. price-consensus-chart | Xylem Inc. Quote
Stocks to Consider
Some better-ranked stocks in the industry are Nordson Corporation (NDSN - Free Report) , Kadant Inc. (KAI - Free Report) and EnPro Industries, Inc. (NPO - Free Report) . All companies presently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, earnings estimates for the companies improved for the current year. Further, earnings surprise for the last reported quarter was 14.15% for Nordson, 33.11% for Kadant and 25.81% for EnPro.