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Xylem (NYSE:XYL) Q3 Earnings: What Can You Expect?

in EARNINGS/INVESTING IDEAS by

Xylem Inc. (NYSE:XYL) is scheduled to report Q3 earnings results on October 29, 2020.

The company is expected to report earnings of $0.50/share on revenue of $1.159 billion. The consensus earnings per share (EPS) of $0.50/share is based on a poll of 16 analysts and represents a decline in eps of −38.5% over the same quarter last year, when the company reported earnings of $0.82/share.

The revenue forecast of $1.159 billion based on a poll of 14 analysts implies a year-over-year (YoY) decline in revenue of −10.6%. Last year the company reported $1.296 billion in revenue for the quarter.

Expected to report EPS contraction of −38.5% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $1,158.79 $1,296.00 −10.6%
EPS $0.50 $0.82 −38.5%

Earnings Call Trends

Historically, management has exceeded analyst expectations 1 out of the last 8 tracked quarters, missed 3 quarters, and met expectations 4 quarters.

What are your expectations from Xylem Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.38 $0.40 4.1% Beat
Q1, 2020 $0.37 $0.23 −37.4% Missed
Q4, 2019 $0.89 $0.89 0% Met
Q3, 2019 $0.82 $0.82 0.0% Met
Q2, 2019 $0.79 $0.79 0% Met
Q1, 2019 $0.56 $0.52 −7.7% Missed
Q4, 2018 $0.88 $0.88 0% Met
Q3, 2018 $0.77 $0.77 0% Met

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −5.4%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 30, 2020 $77.17 $72.98 −5.4% Decline
May 5, 2020 $68.55 $63.06 −8.0% Decline
February 6, 2020 $87.61 $84.20 −3.9% Decline
October 31, 2019 $84.06 $79.12 −5.9% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.97, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.97 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

Xylem Inc. is currently trading at $90.07/share, down −1.7% for the day. The company is trading at approximately 96.7% of its 52-week high of $93.14/share. The company’s stock price is up 23.4% since the last earnings report and down −1.5% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 56.23 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:XYL Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 64.32 and a forward P/E multiple of 49.35.

Xylem Inc.’s current share price also implies a price-to-book (P/B) multiple of 5.68. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $90.07
P/E Ratio 64.3x
P/E Ratio (Fwd) 49.3x
PEG Ratio −1.2
Total Debt / Total Capital 16.7%
Levered Free Cash Flow $620 million
EV / EBITDA 22.4x

Finbox

Xylem Inc. is a large-cap stock with a market capitalization of $16.209 billion and a total enterprise value of $17.941 billion. The company operates in the Industrials sector and the Machinery industry.

Xylem Inc. engages in the design, manufacture, and servicing of engineered products and solutions for the water and wastewater applications in the United States, Europe, the Asia Pacific, and internationally. It operates in three segments: Water Infrastructure, Applied Water, and Measurement & Control Solutions. The Water Infrastructure segment offers various products, including water and wastewater pumps; controls and systems; filtration, disinfection, and biological treatment equipment; and mobile dewatering equipment under the Flygt, Godwin, Wedeco, Sanitaire, and Leopold names for the transportation and treatment of water. The Applied Water segment provides pumps, valves, heat exchangers, controls, and dispensing equipment systems under the Goulds Water Technology, Bell & Gossett, A-C Fire Pump, Standard Xchange, Lowara, Jabsco, and Flojet brand names for residential and commercial building services, and industrial water applications. The Measurement & Control Solutions segment provides smart metering, networked communications, and measurement and control technologies, as well as critical infrastructure technologies that allow customers to use their distribution networks for the delivery, monitoring, and control of critical resources, such as water, electricity, and natural gas. It also offers software and services, including cloud-based analytics, remote monitoring, data management, leak detection, and pressure monitoring solutions and testing equipment, as well as sells smart lighting solutions. This segment sells its products under the EmNet, Pure, Sensus, Smith Blair, Visenti, WTW, and YSI brand names. The company markets and sells its products through a network of direct sales force, resellers, distributors, and value-added solution providers. Xylem Inc. is headquartered in Rye Brook, New York.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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