Back to top

Image: Bigstock

Xylem (XYL) to Report Q1 Earnings: What's in the Offing?

Read MoreHide Full Article

Xylem Inc. (XYL - Free Report) is scheduled to release first-quarter 2022 results on May 4, before market open.

The water solutions provider reported better-than-expected results in each of the trailing four quarters. Earnings surprise was 16.13%, on average. In the last reported quarter, the company’s earnings of 63 cents surpassed the Zacks Consensus Estimate of 62 cents.

Zacks Investment Research
Image Source: Zacks Investment Research

In the past three months, shares of Xylem have lost 12.2%, in line with the industry’s decline.

Key Factors at Play

Xylem is anticipated to have benefited from the strength in residential, industrial and commercial markets in the first quarter. Healthy contract wins, strengthening test business in emerging markets and rising demand for water solutions are likely to have boosted its clean water utilities business’ performance in the quarter. Strength across the company’s wastewater utilities business, driven by a solid demand environment, is also likely to have supported its top line. However, the persistence of supply-chain challenges, cost inflation and logistic issues are expected to have adversely impacted its margin and profitability in the to-be-reported quarter.

Xylem’s strong backlog level, product innovation measures and efforts to boost growth are likely to have been beneficial in the first quarter. Also, its focus on operational execution is expected to have helped it maintain a solid margin performance in the quarter.

For first-quarter 2022, the company expects organic revenues to be flat to up 2% year over year. Coming to the segments, the company anticipates its organic sales of both Water Infrastructure and Applied Water Systems to grow in mid-single digits, whereas that for the Measurement & Control Solutions segment to decline in low-double digits in the quarter.

For the Water Infrastructure segment, the Zacks Consensus Estimate for revenues is pegged at $517 million, implying a 1.6% increase year over year. Revenue estimates for Applied Water are pegged at $403 million, suggesting a 2.5% increase from year-ago quarter’s reported number. Measurement & Control Solutions’ revenues are expected to be $305 million, suggesting a decrease of 13.8%.

The Zacks Consensus Estimate for first-quarter revenues of $1,247 million suggests a 0.7% decrease from the year-ago reported figure. Earnings estimates are pegged at 42 cents per share, suggesting a fall of 25%.

Earnings Whispers

According to our quantitative model, a stock needs to have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or at least 3 (Hold) to increase the odds of an earnings beat. But that is not the case here, as we will see below.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Xylem has an Earnings ESP of 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate is pegged at 42 cents.

Xylem Inc. Price and EPS Surprise

Xylem Inc. Price and EPS Surprise

Xylem Inc. price-eps-surprise | Xylem Inc. Quote

Zacks Rank: The company carries a Zacks Rank #3.

Key Picks

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:

CECO Environmental Corp. (CECE - Free Report) has an Earnings ESP of +9.09% and a Zacks Rank of 3 at present. CECE delivered an earnings surprise of 11.1% in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings estimates of CECE have decreased 25.8% for 2022 in the past 60 days. Its shares have lost 19.9% in the past three months.

Eaton Corporation plc (ETN - Free Report) has an Earnings ESP of +0.85% and a Zacks Rank of 3, currently. ETN delivered a trailing four-quarter earnings surprise of 7%, on average.

Earnings estimates of Eaton have decreased 0.8% for 2022 in the past 60 days. Its shares have declined 7.5% in the past three months.

AGCO Corporation (AGCO - Free Report) has an Earnings ESP of +0.93% and a Zacks Rank of 3, currently. Its earnings surprise in the last four quarters was 56.7%, on average.

In the past 60 days, AGCO’s earnings estimates have decreased 0.7% for 2022. The stock has rallied 10.3% in the past three months.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.