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Here's Why Xylem (XYL) Stock Should Grace Your Portfolio
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Xylem (XYL - Free Report) is thriving on the back of strong backlogs owing to underlying demand. Due to the essential nature of the business, demand remains robust. Pricing actions to mitigate cost inflation are supporting the bottom line.
Xylem’s improved guidance for 2022 raises optimism in the stock. Owing to strong demand, price realization and gradual easing of supply-chain constraints, XYL raised its adjusted earnings per share guidance for 2022 to $2.65-$2.75 compared with $2.50-$2.70 anticipated earlier. This Zacks Rank #2 (Buy) company now expects revenues to increase approximately 4% on a reported basis and 9-10% on an organic basis compared with organic revenue growth and reported revenue increase of 8-10% and 3-5% estimated earlier.
Solid global demand across end markets is supporting Xylem’s top line. The Water Infrastructure segment is benefiting from effective price realization, robust transport demand in Western Europe and healthy activity in the wastewater utility business in the United States and Western Europe. For 2022, the company expects high single-digit growth in Water Infrastructure.
The Applied Water segment is gaining from strong price realization and backlog execution in industrial, commercial and residential end markets. The company expects low double-digit growth in Applied Water. Measurement & Control Solutions is benefiting from robust demand in the advanced metering infrastructure end market and modest improvement in chip supply. The company predicts the segment’s sales to increase in mid-single digits for the year.
Xylem’s commitment to reward its shareholders through dividends and share buybacks is encouraging. In the first nine months of 2022, Xylem paid out dividends worth $163 million, reflecting an increase of 7.2% year over year. The company also bought back shares worth $52 million in the same period. In February 2022, the company hiked its dividend by 7%.
Shares of Xylem have surged 42.8% in the past six months, outperforming the industry’s 21.3% increase.
Image Source: Zacks Investment Research
The positivity surrounding the stock is evident from the Zacks Consensus Estimate for 2022 and 2023 earnings being revised upward by 5% and 2.6% in the past 60 days, respectively.
Other Stocks to Consider
Some other stocks worth considering within the broader Industrial Products sector are as follows:
MRC Global has an estimated earnings growth rate of 325.9% and 37.4% for 2022 and 2023, respectively. Shares of the company have rallied 16.5% in the past six months.
IDEX Corporation (IEX - Free Report) presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of 5.7%, on average.
IDEX has an estimated earnings growth rate of 28.4% and 6.1% for 2022 and 2023, respectively. Shares of IEX have gained 26.9% in the past six months.
EnerSys (ENS - Free Report) delivered a trailing four-quarter earnings surprise of 27.1%, on average. ENS presently carries a Zacks Rank of 2.
EnerSys has an estimated earnings growth rate of 7.2% and 26.3% for fiscal 2023 and 2024, respectively. The stock increased 26.2% in the past six months.
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Here's Why Xylem (XYL) Stock Should Grace Your Portfolio
Xylem (XYL - Free Report) is thriving on the back of strong backlogs owing to underlying demand. Due to the essential nature of the business, demand remains robust. Pricing actions to mitigate cost inflation are supporting the bottom line.
Xylem’s improved guidance for 2022 raises optimism in the stock. Owing to strong demand, price realization and gradual easing of supply-chain constraints, XYL raised its adjusted earnings per share guidance for 2022 to $2.65-$2.75 compared with $2.50-$2.70 anticipated earlier. This Zacks Rank #2 (Buy) company now expects revenues to increase approximately 4% on a reported basis and 9-10% on an organic basis compared with organic revenue growth and reported revenue increase of 8-10% and 3-5% estimated earlier.
Solid global demand across end markets is supporting Xylem’s top line. The Water Infrastructure segment is benefiting from effective price realization, robust transport demand in Western Europe and healthy activity in the wastewater utility business in the United States and Western Europe. For 2022, the company expects high single-digit growth in Water Infrastructure.
The Applied Water segment is gaining from strong price realization and backlog execution in industrial, commercial and residential end markets. The company expects low double-digit growth in Applied Water. Measurement & Control Solutions is benefiting from robust demand in the advanced metering infrastructure end market and modest improvement in chip supply. The company predicts the segment’s sales to increase in mid-single digits for the year.
Xylem’s commitment to reward its shareholders through dividends and share buybacks is encouraging. In the first nine months of 2022, Xylem paid out dividends worth $163 million, reflecting an increase of 7.2% year over year. The company also bought back shares worth $52 million in the same period. In February 2022, the company hiked its dividend by 7%.
Shares of Xylem have surged 42.8% in the past six months, outperforming the industry’s 21.3% increase.
Image Source: Zacks Investment Research
The positivity surrounding the stock is evident from the Zacks Consensus Estimate for 2022 and 2023 earnings being revised upward by 5% and 2.6% in the past 60 days, respectively.
Other Stocks to Consider
Some other stocks worth considering within the broader Industrial Products sector are as follows:
MRC Global Inc. (MRC - Free Report) presently sports a Zacks Rank #1 (Strong Buy). The company pulled off a trailing four-quarter earnings surprise of approximately 103%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
MRC Global has an estimated earnings growth rate of 325.9% and 37.4% for 2022 and 2023, respectively. Shares of the company have rallied 16.5% in the past six months.
IDEX Corporation (IEX - Free Report) presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of 5.7%, on average.
IDEX has an estimated earnings growth rate of 28.4% and 6.1% for 2022 and 2023, respectively. Shares of IEX have gained 26.9% in the past six months.
EnerSys (ENS - Free Report) delivered a trailing four-quarter earnings surprise of 27.1%, on average. ENS presently carries a Zacks Rank of 2.
EnerSys has an estimated earnings growth rate of 7.2% and 26.3% for fiscal 2023 and 2024, respectively. The stock increased 26.2% in the past six months.