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Reasons Why Xylem (XYL) Deserves to Be in Your Portfolio
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Xylem Inc. (XYL - Free Report) stands to benefit from strength across its businesses, acquisitions and focus on operational excellence. The company remains focused on investing in growth opportunities and strengthening its long-term market position.
Image Source: Zacks Investment Research
It has a market capitalization of $34 billion. Over the past six months, it has gained 25.7% compared with the industry’s growth of 5%. XYL currently carries a Zacks Rank #2 (Buy).
Let’s delve into the factors that have been aiding the firm for a while now.
Business Strength: The company’s Measurement & Control Solutions segment is benefiting from robust demand for its smart metering solutions across clean water utilities and industrials end markets. Solid demand for its pumps, filtration and treatment equipment in transportation and water treatment markets is boosting the Water Infrastructure segment’s performance.
Growing popularity of treatment and assessment services solutions is the key catalyst to the Water Solutions and Services segment’s growth. Driven by strength across its businesses, Xylem expects revenues of approximately $8.5 billion in 2024, indicating 15-16% and 4-6% growth from the year-ago levels on a reported basis and on an organic basis, respectively.
Acquisition Benefits: XYL believes in adding complementary businesses to its portfolio via acquisitions. The company acquired mission-critical water treatment solutions and services provider, Evoqua, in May 2023. The inclusion of Evoqua’s advanced water and wastewater treatment capabilities complements Xylem’s portfolio of solutions across the water cycle.
The transaction is expected to deliver run-rate cost synergies of $140 million within three years upon closing. Acquisitions contributed $480 million to total revenues in the first quarter of 2024.
Rewards to Shareholders: The company remains committed to rewarding its shareholders through dividend payouts. For instance, in the first three months of 2024, it paid dividends of $88 million, up 46.7% year over year. The company also bought back shares worth $15 million in the same year. In February 2024, it hiked its dividend by 9%.
Northbound Estimate Revision: The Zacks Consensus Estimate for XYL’s 2024 earnings has been revised 2.7% upward in the past 60 days. The consensus estimate for 2025 earnings has increased 1.7% over the same time frame.
Other Key Picks
Some other top-ranked companies from the same space are discussed below.
It has a trailing four-quarter average earnings surprise of 122.5%. The consensus estimate for LXFR’s 2024 earnings has improved 13.5% in the past 60 days.
Ingersoll Rand Inc. (IR - Free Report) presently carries a Zacks Rank #2 and has a trailing four-quarter earnings surprise of 12.9%, on average.
The Zacks Consensus Estimate for IR’s 2024 earnings has grown 1.9% in the past 60 days.
Crane Company (CR - Free Report) carries a Zacks Rank #2 and has a trailing four-quarter earnings surprise of 15.2%, on average.
The Zacks Consensus Estimate for CR’s 2024 earnings has risen 4.2% in the past 60 days.
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Reasons Why Xylem (XYL) Deserves to Be in Your Portfolio
Xylem Inc. (XYL - Free Report) stands to benefit from strength across its businesses, acquisitions and focus on operational excellence. The company remains focused on investing in growth opportunities and strengthening its long-term market position.
Image Source: Zacks Investment Research
It has a market capitalization of $34 billion. Over the past six months, it has gained 25.7% compared with the industry’s growth of 5%. XYL currently carries a Zacks Rank #2 (Buy).
Let’s delve into the factors that have been aiding the firm for a while now.
Business Strength: The company’s Measurement & Control Solutions segment is benefiting from robust demand for its smart metering solutions across clean water utilities and industrials end markets. Solid demand for its pumps, filtration and treatment equipment in transportation and water treatment markets is boosting the Water Infrastructure segment’s performance.
Growing popularity of treatment and assessment services solutions is the key catalyst to the Water Solutions and Services segment’s growth. Driven by strength across its businesses, Xylem expects revenues of approximately $8.5 billion in 2024, indicating 15-16% and 4-6% growth from the year-ago levels on a reported basis and on an organic basis, respectively.
Acquisition Benefits: XYL believes in adding complementary businesses to its portfolio via acquisitions. The company acquired mission-critical water treatment solutions and services provider, Evoqua, in May 2023. The inclusion of Evoqua’s advanced water and wastewater treatment capabilities complements Xylem’s portfolio of solutions across the water cycle.
The transaction is expected to deliver run-rate cost synergies of $140 million within three years upon closing. Acquisitions contributed $480 million to total revenues in the first quarter of 2024.
Rewards to Shareholders: The company remains committed to rewarding its shareholders through dividend payouts. For instance, in the first three months of 2024, it paid dividends of $88 million, up 46.7% year over year. The company also bought back shares worth $15 million in the same year. In February 2024, it hiked its dividend by 9%.
Northbound Estimate Revision: The Zacks Consensus Estimate for XYL’s 2024 earnings has been revised 2.7% upward in the past 60 days. The consensus estimate for 2025 earnings has increased 1.7% over the same time frame.
Other Key Picks
Some other top-ranked companies from the same space are discussed below.
Luxfer Holdings plc (LXFR - Free Report) presently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
It has a trailing four-quarter average earnings surprise of 122.5%. The consensus estimate for LXFR’s 2024 earnings has improved 13.5% in the past 60 days.
Ingersoll Rand Inc. (IR - Free Report) presently carries a Zacks Rank #2 and has a trailing four-quarter earnings surprise of 12.9%, on average.
The Zacks Consensus Estimate for IR’s 2024 earnings has grown 1.9% in the past 60 days.
Crane Company (CR - Free Report) carries a Zacks Rank #2 and has a trailing four-quarter earnings surprise of 15.2%, on average.
The Zacks Consensus Estimate for CR’s 2024 earnings has risen 4.2% in the past 60 days.