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What's in the Offing for Xylem (XYL) this Earnings Season?

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Xylem Inc. (XYL - Free Report) is slated to report second-quarter 2017 results on Aug 1, before the market opens.

Over the last one month, Xylem’s shares yielded a return of 3.59%, outperforming 1.52% growth recorded by the industry.

The company pulled off a positive average earnings surprise of 0.11% over the last four quarters.

Let’s see how things are shaping up prior to this announcement.

Factors at Play

Increased infrastructure spending of the government authorities in developing countries (like India) and solid demand for state-of-the-art water solutions are anticipated to boost Xylem’s revenue growth trajectory in the quarters ahead. Moreover, robust top-line performances, restructuring initiatives undertaken to secure productivity gains and greater cost discipline are projected to bolster bottom-line results in the to-be-reported quarter. Notably, the acquisitions of Sensus and Visenti (Oct 2016) are also expected to boost revenues and profitability in the quarter, by fortifying the company’s public utility business.

However, the company noted that a stronger U.S. dollar might dent overseas markets sales and profits in the quarter to be reported. In addition, headwinds such as sudden supply chain issues or stiff industry rivalry remain key concerns for the company.

Earnings Whispers

Our proven model does not conclusively show that Xylem will likely beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. 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.

Zacks ESP: Xylem has an Earnings ESP of 0.00%. This is because the Most Accurate estimate of 57 cents comes in line with the Zacks Consensus Estimate.

Zacks Rank: Xylem carries a favorable Zacks Rank #2. However, a 0.00% ESP makes surprise prediction difficult.

Xylem Inc. Price and EPS Surprise


Xylem Inc. Price and EPS Surprise | Xylem Inc. Quote

Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Here are three stocks within the industry that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

AGCO Corporation (AGCO - Free Report) has an Earnings ESP of +7.14% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Altra Industrial Motion Corp. (AIMC - Free Report) has an Earnings ESP of +4.44% and also carries Zacks Rank #1.

AptarGroup, Inc. (ATR - Free Report) has an Earnings ESP of +2.06%, and a Zacks Rank #2.

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