Xylem (XYL) To Report Q3 Earnings: What's In The Offing?

Xylem Inc. (NYSE:XYL) is scheduled to release third-quarter 2019 results on Oct 31, before the market opens.

The company delivered weaker-than-expected results in one of the last four quarters, while recorded in-line results thrice. Average earnings surprise was a negative 2.59%. In the last reported quarter, the company’s earnings of 79 cents were in line with the Zacks Consensus Estimate.

In the past three months, shares of the water solutions provider have gained 3.6% compared with the industry’s growth of 0.7%.

Let us see how things are shaping up for Xylem this quarter.

Factors Affecting Q3 Performance

Xylem’s third-quarter results are expected to reflect gains from strengthening of the U.S. utility market, investments for product innovation and robust digital solutions business. Also, businesses in India and China are anticipated to have flourished in the quarter. Shareholder-friendly policies might have added more value to shareholder’s wealth in the quarter.

However, uncertain economic conditions might have hampered business in Latin America and Europe. Additionally, adverse impacts of unfavorable movements in foreign currencies, cost escalation due to tariffs, realignment initiatives and other inflationary pressures might have weighed on the company’s performance in the quarter.

For the to-be-reported quarter, Xylem anticipates organic sales growth of 4-5%, whereas it registered 8% in the year-ago quarter. On a segmental basis, organic sales are expected to grow 4-5% for the Water Infrastructure segment, 3-4% for Applied Water, and 5-6% for Measurement & Control Solutions. Adjusted operating margin is predicted to be 15-15.1%.

The Zack Consensus Estimate for the company’s earnings per share is pegged at 82 cents, indicating growth of 6.5% from the year-ago quarter’s reported figure. Also, the consensus estimate for revenues of $1,329 million suggests 3.3% rise from the year-ago quarter’s reported figure.

For the Water Infrastructure segment, the Zacks Consensus Estimate for revenues for the third quarter of 2019 is pegged at $560 million, suggesting a 3.5% improvement from that generated in the year-ago quarter.

Third-quarter revenue estimates for the Applied Water segment are pegged at $384 million, suggesting 1.6% growth from sales generated in the year-ago quarter. For the Measurement & Control Solutions segment, revenue estimates are pegged at $383 million, indicating 4.1% rise from the year-ago reported figure.

Earnings Whispers

Our proven model doesn’t conclusively predict an earnings beat for Xylem 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. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The company has an Earnings ESP of -0.71%.

Xylem Inc. Price, Consensus and EPS Surprise