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Can Xylem (XYL) Keep the Earnings Streak Alive? - Analyst Blog

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Water solutions provider Xylem Inc. ( XYL ) is set to report fourth-quarter 2013 results before the opening bell on Feb 4. In the last reported quarter, it delivered 40.0% positive earnings surprise. Let's see how things are shaping up for this announcement.

Factors to Consider

Xylem reported improved year-over-year results in the third quarter of 2013 with adjusted earnings per share of 49 cents, up 11% year over year. Total revenue in the quarter improved 4% year over year to $965 million. The increase in revenues was a result of improved demand in emerging markets as well as better-than-expected demand in Europe. Organically, revenues for the quarter increased 1% year over year.

In fourth-quarter 2013, Xylem gained market share through a number of product launches and several contract wins across the globe. The company has been successfully implementing its strategy to grow internationally.

Xylem anticipates revenues to be $3.8 billion in 2013 and earnings per share to be within a band of $1.60 to $1.65. GAAP earnings per share are projected to be around $1.30.

Earnings Whispers

Our proven model shows that Xylem is likely to beat earnings since it has the appropriate combination of the following 2 key ingredients:

Positive Zacks ESP:Earnings ESP , which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +1.92%. This indicates a likely positive earnings surprise.

Zacks Rank: Xylem has a Zacks Rank #3 (Hold). This increases the predictive power of ESP. The combination of the company's Zacks Rank and Earnings ESP assures us of a positive earnings surprise in the to-be-reported quarter.

Stocks with Zacks Ranks of #1, 2 and 3 have significantly higher chances of beating the earnings estimates. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

Other Stocks to Consider

Other stocks in the industrial goods sector that have both a positive earnings ESP and a favorable Zacks Rank are:

Gorman-Rupp Co. ( GRC ), Earnings ESP of +4.00% and a Zacks Rank #2 (Buy).

Ingersoll-Rand plc ( IR ), with Earnings ESP of +6.15% and a Zacks Rank #3.

Illinois Tool Works Inc. ( ITW ), with Earnings ESP of +1.02% and a Zacks Rank #3.

GORMAN RUPP CO (GRC): Free Stock Analysis Report

INGERSOLL RAND (IR): Free Stock Analysis Report

ILL TOOL WORKS (ITW): Free Stock Analysis Report

XYLEM INC (XYL): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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