) is scheduled to release its second-quarter 2014 results before
the opening bell on Jul 29. The company had delivered a positive
earnings surprise of 6.25% in the preceding quarter. Let's see how
things are shaping up prior to this announcement.
Factors to Consider
Xylem has been experiencing steady growth on the back of
contract wins. Recently, the company won quite a few contracts in
regions including France, Colombia, U.A.E., Sweden, China, India
and Beijing. Xylem aims at further international expansion in order
to facilitate a stronger market foothold. However, the company
trades in various currencies like the Euro, the Swedish Krona, the
British Pound, the Canadian Dollar and the Australian Dollar to
name a few. Hence, increased expansion of business in foreign lands
will escalate the risks associated with it.
Moreover, with growth in demand for water solutions, the
industry is witnessing a rise in the number of service providers.
This leads to a heightened competition, causing a loss of market
share as well as lesser control over prices.
Our proven model conclusively shows that Xylem is likely to miss
earnings this quarter. That is because a stock needs to have both a
and a Zacks Rank #1, 2 or 3 for this to happen. That is not the
case here as we see below.
Xylem's Most Accurate estimate stands at 42 cents, while the Zacks
Consensus is pegged slightly higher at 44 cents. Hence, the
Earnings ESP is -4.55%.
Xylem has a Zacks Rank #4 (Sell) which lowers the predictive power
of ESP. We caution against stocks with Zacks Ranks #4 and 5
(Sell-rated stocks) going into the earnings announcement,
especially when the company is seeing negative estimate revisions
Other Stocks to Consider
Here are some other companies in the industry that investors may
want to consider on the basis of our model, which shows that they
have the right combination of elements to post an earnings beat
Flowserve Corp. (
), Earnings ESP of +1.00% and a Zacks Rank #3 (Hold).
Nordson Corporation (
), Earnings ESP of +1.77% and a Zacks Rank #3.
Kennametal Inc. (
), Earnings ESP of +1.12% and a Zacks Rank #3.
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FLOWSERVE CORP (FLS): Free Stock Analysis
NORDSON CORP (NDSN): Free Stock Analysis Report
KENNAMETAL INC (KMT): Free Stock Analysis
XYLEM INC (XYL): Free Stock Analysis Report
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