Xylem Inc.XYL is slated to report second-quarter 2018 results before the opening bell on Jul 31.
Over the trailing four quarters, the company pulled off an average positive earnings surprise of 1.2%. However, in the last reported quarter, its earnings of 51 cents came in line with the Zacks Consensus Estimate.
Let's see how things are shaping up prior to this announcement.
Factors to Play
Xylem's Q2 top-line performance will likely reflect favorable impact of stronger smart-meter business, sturdier analytics sales, higher light industrial markets demand, ongoing government investments in water infrastructure projects, and recovering mining, as well as energy market conditions. The company also believes strategic project wins, product launches, acquisition benefits and favorable exchange rates will aid in boosting its revenues in the quarters ahead.
Xylem anticipates to record year-over-year revenue growth within 5-6% in the June-end quarter.
The Zacks Consensus Estimates for second-quarter revenues of Xylem's Water Infrastructure and Applied Water segments are currently pegged at $529 million and $390 million, respectively, higher than the corresponding tallies of $480 million and $366 million reported in the preceding quarter.
Ongoing commercial initiatives, greater operational excellence, elevated volumes, high margins secured from acquired businesses, and reduced corporate taxes are expected to have favorably impacted Xylem's profitability in the to-be-reported quarter. Nevertheless, persistence of headwinds like unfavorable revenue mix, input-cost inflation and expenses relating to the ongoing product-localization investments might have depressed the company's bottom-line performance in the quarter to be reported.
The Zacks Consensus Estimates for the Q2 operating income of Xylem's Water Infrastructure and Applied Water segments are currently pegged at $91 million and $62 million, respectively, higher than the corresponding tallies of $54 million and $53 million reported in the preceding quarter.
Xylem's unfavourable Zacks Rank #4 (Sell), when combined with an Earnings ESP of -0.59%, makes surprise predictions inconclusive.
Xylem Inc. Price and EPS Surprise
Xylem Inc. Price and EPS Surprise | Xylem Inc. Quote
You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .
As per our proven model, a stock needs to have a combination of a positive Earnings ESP, and a Zacks Rank #1 (Strong Buy) or 2 (Buy) or at least 3 (Hold) for a likely earnings beat.
It should be noted that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some stocks in the Zacks Industrial Products sector that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:
Actuant Corporation ATU with an Earnings ESP of +4.72% and a Zacks Rank of 1. You can see the complete list of today's Zacks #1 Rank stocks here .
Avery Dennison Corporation AVY , with an Earnings ESP of +0.05% and a Zacks Rank #2.
Emerson Electric Co. EMR , with an Earnings ESP of +0.15% and a Zacks Rank of 2.
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