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Xylem (XYL) Down 7.1% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Xylem (XYL - Free Report) . Shares have lost about 7.1% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Xylem due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.
Xylem Q2 Earnings Beat Estimates on Margin Gains, View Raised
Xylem’s second-quarter 2026 adjusted earnings of $1.46 per share beat the Zacks Consensus Estimate of $1.34 by 9%. The bottom line increased 15.9% year over year.
Its revenues of $2.34 billion beat the consensus estimate of $2.33 billion by 0.4%. The top line increased 1.5% year over year, driven by strength in Transport, Energy Metering, Building Solutions and capital projects in heavy industries. Organic revenues increased 1% in the quarter.
Orders of $3.09 billion increased 42% year over year on a reported basis and 41% on an organic basis.
Segmental Details
Revenues in the Water Infrastructure segment totaled $683 million, up 5% year over year. Organic sales increased 3%, driven by strength in Transport, which more than offset weakness in Treatment and China. The Zacks Consensus Estimate was pegged at $664 million.
The Applied Water segment generated revenues of $501 million, up 4% year over year. Organic sales increased 3% in the quarter, driven by strength in the commercial end market. The Zacks Consensus Estimate was pegged at $492 million.
Quarterly revenues of the Measurement & Control Solutions segment totaled $508 million, down 6% year over year. Organic sales declined 1%, as strength in Energy Metering and VUE demand partly offset lower revenues. The Zacks Consensus Estimate was pegged at $538 million.
Quarterly revenues at the Water Solutions and Services segment totaled $644 million, up 3% year over year. Organic sales increased 1%, driven by strength in capital projects and Dewatering. The Zacks Consensus Estimate was pegged at $636 million.
Margin Profile
Xylem’s adjusted EBITDA was $544 million, up 8.4% from the year-ago quarter’s level. The margin improved to 23.3% from 21.8% in the prior-year quarter.
Adjusted operating income was $447 million, up 11.2% year over year. Adjusted operating margin increased to 19.1% from 17.5% in the year-earlier quarter.
Xylem’s Balance Sheet and Cash Flow
Exiting the second quarter, Xylem had cash and cash equivalents of $1.28 billion compared with $1.48 billion at the end of December 2025. Long-term debt was $2.40 billion at the end of the quarter compared with $1.41 billion at the end of December 2025.
In the first six months of 2026, Xylem generated net cash of $398 million from operating activities compared with $338 million in the year-ago period. Capital expenditure was $179 million, up 5.9% from the year-earlier period.
Rewards to Shareholders
In the first six months of 2026, Xylem paid dividends of $207 million, up 5.6% year over year. The company also bought back shares worth $1.24 billion in the same period compared with $13 million in the year-ago period.
2026 Guidance
Xylem has updated its 2026 outlook. The company now expects revenues of approximately $9.2 billion compared with the previous projection of $9.2-$9.3 billion. This indicates growth of approximately 2% from the prior-year level on a reported basis and 2-3% on an organic basis.
Adjusted EBITDA margin is estimated to be approximately 23.1-23.5%, indicating an expansion of 90-130 basis points from the year-earlier actual. Xylem forecasts adjusted earnings in the range of $5.55-$5.70 per share, up from the previous guidance of $5.35-$5.60.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
Currently, Xylem has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock has a score of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Xylem has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
View the Zacks #1 Rank List
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Xylem (XYL) Down 7.1% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Xylem (XYL - Free Report) . Shares have lost about 7.1% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Xylem due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.
Xylem Q2 Earnings Beat Estimates on Margin Gains, View Raised
Xylem’s second-quarter 2026 adjusted earnings of $1.46 per share beat the Zacks Consensus Estimate of $1.34 by 9%. The bottom line increased 15.9% year over year.
Its revenues of $2.34 billion beat the consensus estimate of $2.33 billion by 0.4%. The top line increased 1.5% year over year, driven by strength in Transport, Energy Metering, Building Solutions and capital projects in heavy industries. Organic revenues increased 1% in the quarter.
Orders of $3.09 billion increased 42% year over year on a reported basis and 41% on an organic basis.
Segmental Details
Revenues in the Water Infrastructure segment totaled $683 million, up 5% year over year. Organic sales increased 3%, driven by strength in Transport, which more than offset weakness in Treatment and China. The Zacks Consensus Estimate was pegged at $664 million.
The Applied Water segment generated revenues of $501 million, up 4% year over year. Organic sales increased 3% in the quarter, driven by strength in the commercial end market. The Zacks Consensus Estimate was pegged at $492 million.
Quarterly revenues of the Measurement & Control Solutions segment totaled $508 million, down 6% year over year. Organic sales declined 1%, as strength in Energy Metering and VUE demand partly offset lower revenues. The Zacks Consensus Estimate was pegged at $538 million.
Quarterly revenues at the Water Solutions and Services segment totaled $644 million, up 3% year over year. Organic sales increased 1%, driven by strength in capital projects and Dewatering. The Zacks Consensus Estimate was pegged at $636 million.
Margin Profile
Xylem’s adjusted EBITDA was $544 million, up 8.4% from the year-ago quarter’s level. The margin improved to 23.3% from 21.8% in the prior-year quarter.
Adjusted operating income was $447 million, up 11.2% year over year. Adjusted operating margin increased to 19.1% from 17.5% in the year-earlier quarter.
Xylem’s Balance Sheet and Cash Flow
Exiting the second quarter, Xylem had cash and cash equivalents of $1.28 billion compared with $1.48 billion at the end of December 2025. Long-term debt was $2.40 billion at the end of the quarter compared with $1.41 billion at the end of December 2025.
In the first six months of 2026, Xylem generated net cash of $398 million from operating activities compared with $338 million in the year-ago period. Capital expenditure was $179 million, up 5.9% from the year-earlier period.
Rewards to Shareholders
In the first six months of 2026, Xylem paid dividends of $207 million, up 5.6% year over year. The company also bought back shares worth $1.24 billion in the same period compared with $13 million in the year-ago period.
2026 Guidance
Xylem has updated its 2026 outlook. The company now expects revenues of approximately $9.2 billion compared with the previous projection of $9.2-$9.3 billion. This indicates growth of approximately 2% from the prior-year level on a reported basis and 2-3% on an organic basis.
Adjusted EBITDA margin is estimated to be approximately 23.1-23.5%, indicating an expansion of 90-130 basis points from the year-earlier actual.
Xylem forecasts adjusted earnings in the range of $5.55-$5.70 per share, up from the previous guidance of $5.35-$5.60.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
Currently, Xylem has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock has a score of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Xylem has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.