Xylem Inc. (XYL), headquartered in Washington, District of Columbia, is a water technology company with a market capitalization of $25.7 billion. Addresses the world’s most critical water, wastewater and energy challenges.
This water technology company has noticeably underperformed the broader market over the past 52 weeks. Xylem shares have fallen 15.4% during this period, while the broader S&P 500 index ($SPX) has soared 24.3%. Additionally, on a year-over-year basis, the stock is down 20.5%, compared to SPX’s gain of 8.1%.
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To narrow the focus, the company has also lagged the State Street Industrial Select Sector SPDR Fund’s (XLI) return of 17.9% over the past 52 weeks and gain of 9.7% year to date.
On April 28, XYL shares plunged 4.5% despite delivering better-than-expected first-quarter results. The company’s revenue rose 2.7% year over year to $2.1 billion, beating analyst estimates by a slight margin. Additionally, its Adjusted EPS of $1.12 beat consensus expectations of $1.09. Despite the earnings beat, investor sentiment remained cautious as organic revenue remained flat and missed analyst expectations, overshadowing the modest reported revenue growth. Management attributed the quarter’s upbeat performance to resilient demand in the U.S. municipal and utility markets, particularly within the water infrastructure and metering and control solutions segments. However, results were partially impacted by project timeline delays in the Water Solutions and Services segment, continued weakness in China and ongoing portfolio simplification initiatives.
For the current fiscal year, which ends in December, analysts expect XYL’s EPS to grow 8.5% year-over-year to $5.51. The company’s track record of earnings surprises is promising. Met or beat consensus estimates in each of the last four quarters.
Among the 22 analysts covering the stock, the consensus rating is “Moderate Buy,” which is based on 12 “Strong Buy” ratings, one “Moderate Buy” and nine “Hold” ratings.
The setup is slightly less bullish than a month ago, with 13 analysts suggesting a “Strong Buy” rating.