More than a month has gone by since the last earnings report for Xylem Inc. (XYL Quick QuoteXYL - Free Report) . Shares have added about 6.2% in the past month, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is its due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Second-Quarter 2017 Highlights

Xylem reported mixed second-quarter 2017 results.

Earnings: Quarterly adjusted earnings came in at $0.59 per share, surpassing the Zacks Consensus Estimate of $0.57. In addition, the bottom line came in higher than the year-ago tally of $0.48 per share.

Revenues: Quarterly revenues were $1,164 million, up 24.9% year over year. However, the top line missed the Zacks Consensus Estimate of $1,172 million.

Margins/Costs: Xylem’s cost of revenues for the reported quarter came in at $705 million, jumping 25.2% year over year. Gross profit margin during the quarter was 39.4%, down 20 basis points (bps) year over year.

Selling, general and administrative expenses came in at $270 million compared to $227 million incurred in the year-ago period. Research and development expenses were $44 million, as against $27 million reported in the prior-year quarter.

Quarterly adjusted operating margin was 13.3%, up 30 basis points (bps) year over year.

Segment Details: The Water Infrastructure segment generated revenues of $482 million, as against $484 million recorded in the comparable period last year.

Revenues from the Applied Water segment totaled $361 million, down from $366 million recorded in the year-ago quarter.

The company’s recently formed Sensus & Analytics business segment generated revenues worth $321 million in the reported quarter, up from $82 million recorded in the year-earlier period.

Balance Sheet and Cash Flow: Xylem exited second-quarter 2017 with cash and cash equivalents of $288 million compared with $308 million as of Dec 31, 2016. Long-term debt was $2,168 million, as against $2,108 million recorded at the end of 2016.

In first-half 2017, Xylem generated cash of $151 million from operating activities compared with $125 million recorded in the prior-year period. Capital expenditure was $77 million, as against $62 million incurred in the year-ago quarter.

Outlook: Xylem raised its revenue guidance for 2017 from $4.5–$4.6 billion to the $4.65–$4.70 billion range. Notably, eliminating the impact of acquisitions and foreign currency translation, the company anticipates accruing organic revenue growth within the range of 2–3% for 2017. Moreover, it lifted its adjusted earnings guidance for the full year from $2.23–$2.38 per share to the $2.30–$2.40 per share range.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the past month as none of them issued any earnings estimate revisions.

Xylem Inc. Price and Consensus

 

Xylem Inc. Price and Consensus | Xylem Inc. Quote

VGM Scores

At this time, Xylem's stock has an average Growth Score of C, while it is doing a bit better on the momentum front with B. The stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall,the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Zacks' style scores indicate that the company's stock is more suitable for momentum investors than growth investors.

Outlook

The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.