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Xylem (XYL) to Report Q2 Earnings: What's in the Cards?

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Xylem Inc. (XYL - Free Report) is scheduled to release second-quarter 2023 earnings on Aug 2, before market open.

The company has a stellar earnings surprise history, having outperformed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 17.7%.

Let’s see how things have shaped up for Xylem this earnings season.

Factors to Note

Escalating raw material, labor, freight and overhead costs are likely to have weighed on XYL’s second-quarter performance. Also, increasing selling, general and administrative expenses are expected to have hurt Xylem’s bottom line. Additionally, higher strategic investments are likely to have dented the company’s margins in the to-be-reported quarter.

Given the company’s substantial international presence, foreign-currency headwinds are likely to have weighed on its top line in the second quarter.

However, effective price realization and strength in both utility and industrial end markets within the Water Infrastructure segment are expected to have supported the company’s performance in the to-be-reported quarter. For the second quarter, the Zacks Consensus Estimate for the Water Infrastructure segment’s revenues indicates a 7.8% increase from the year-ago reported figure.

The acquisition of Evoqua (May 2023), which bolstered Xylem’s position in water technologies, solutions and services, and strengthened its foothold in lucrative end markets, is likely to have aided the company’s performance in the second quarter. The Zacks Consensus Estimate for second-quarter revenues suggests a 23% increase from the year-ago period. For the quarter, the consensus estimate for adjusted earnings indicates a 28.8% jump from the year-ago reported number.

Xylem Inc. Price and EPS Surprise

 

Xylem Inc. Price and EPS Surprise

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

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for XYL this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here, as elaborated below.

Earnings ESP: XYL has an Earnings ESP of -4.05% as the Most Accurate Estimate is pegged at 83 cents, lower than the Zacks Consensus Estimate of 87 cents. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Zacks Rank: XYL presently carries a Zacks Rank of 2.

Highlights of Q1 Earnings

Xylem’s first-quarter 2023 adjusted earnings (excluding 18 cents from non-recurring items) of 72 cents per share surpassed the Zacks Consensus Estimate of adjusted earnings of 62 cents per share. The bottom line jumped 53% year over year. Xylem’s revenues of $1,448 million also outperformed the consensus estimate of $1,340.7 million and rose 13.8% year over year.

Stocks to Consider

Here are some companies within the broader Industrial Products sector, which according to our model, have the right combination of elements to beat on earnings this reporting cycle.

Emerson Electric Co. (EMR - Free Report) has an Earnings ESP of +2.35% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company is scheduled to release third-quarter fiscal 2023 (ended Jun 30, 2023) results on Aug 2. Emerson’s earnings have surpassed the Zacks Consensus Estimate in three of the preceding four quarters while missing in one, the average beat being 4.5%.

Allegion plc (ALLE - Free Report) has an Earnings ESP of +3.94% and a Zacks Rank of 3. The company is scheduled to release second-quarter results on Jul 26.

ALLE’s earnings have surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 12.5%.

Ingersoll Rand Inc. (IR - Free Report) has an Earnings ESP of +0.85% and a Zacks Rank of 3. The company is slated to release second-quarter 2023 results on Aug 2.

Ingersoll Rand’s earnings have surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 12.6%.

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

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