Listen up, investors! Xylem Inc. (XYL) is all set to unveil its fourth-quarter 2023 results on Feb 6 before the market wakes up.
It’s no secret that Xylem has a track record of pulling off some jaw-dropping earnings surprises, having flexed its muscles and outperformed the Zacks Consensus Estimate in each of the preceding four quarters, with an average beat of 14.4%.
Let’s dive into the deep end and take a closer look at how Xylem has been paddling along this earnings season.
Shaping Factors
Diving right in – we’ve got some praise-worthy strength across the utilities and industrial water applications end markets that should have given Xylem’s fourth-quarter results a solid push. The Measurement & Control Solutions segment has been riding high on the wave of improving supply chains and robust demand in the test and measurement market. The Zacks Consensus Estimate is expecting a wave-making 15.9% uptick in the segment’s revenues.
Hold on tight – the growth in the utilities and industrial end markets is likely to have kicked up a storm in the Water Infrastructure segment’s performance. The consensus mark for the segment’s revenues is suggesting an approximate 24.1% surge from the previous year.
It doesn’t end there – the Applied Water segment has been navigating the waters with strength in both the building solutions and industrial end markets, even though some rough seas in the residential end market have been a drag. The Zacks Consensus Estimate for the segment’s revenues hints at a more tranquil increase of 0.7% from the prior year.
Let’s not forget – Xylem has bolstered its arsenal with the Evoqua acquisition in May 2023, beefing up its position in water technologies, solutions, and services, and strengthening its foothold in the big leagues. This move is expected to have made some waves in the company’s top-line results in the to-be-reported quarter.
Word on the street is that Xylem has set its sights high, expecting revenues of $7.3 billion in 2023, signaling a whopping 32% surge on a reported basis and close to 11% organically.
However, the stormy weather ahead could reflect some impact on the company’s bottom line, with raw material cost inflation, high labor, freight, and overhead costs likely to make some waves in the fourth quarter. To top it off, unfavorable foreign currency movements might also have caused some turbulence for the company’s margins and profitability.
Xylem Inc. Price and EPS Surprise
Xylem Inc. price-eps-surprise | Xylem Inc. Quote
Zacks Model
Hold your breath – our crystal ball predicts that Xylem is likely to pull off an earnings beat this time around. Why, you ask? Well, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) gives the odds of an earnings beat a good head start. And guess what? That’s the case here!
Got your seatbelt on? Xylem has an Earnings ESP of +1.40%. If you want to catch a sneak peek at the best stocks before anyone else, our Earnings ESP Filter has your back.
The company is currently cruising with a Zacks Rank #3.
Other Stocks With the Favorable Combination
First things first – here are three other companies that you should keep a weather eye on, as our model shows that these have got the right moves to post an earnings beat in the upcoming release:
Alarm.com Holdings ALRM has an Earnings ESP of +8.79% and a Zacks Rank #3. You can check out the complete list of today’s Zacks #1 Rank stocks here.
Hold on to your hat – the company is all set to release its fourth-quarter results on Feb 22, and has boasted a trailing four-quarter earnings surprise of 35%, on average.
Atmus Filtration Technologies Inc. ATMU has an Earnings ESP of +3.12% and a Zacks Rank #3. The company is set to spill the beans on its fourth-quarter results on Feb 14 and has sported a trailing four-quarter earnings surprise of 23.4%, on average.
Ingersoll Rand IR has an Earnings ESP of +0.98% and a Zacks Rank #3. The company is on track to unveil its fourth-quarter results on Feb 15, and has boasted a trailing four-quarter earnings surprise of 16.1%, on average.
Keep your eyes peeled for upcoming earnings announcements with the Zacks Earnings Calendar.
Disclaimer: The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
