Xylem (NYSE:XYL) Shares Gap Down Following Weak Earnings

Xylem Inc. (NYSE:XYL)’s share price gapped down prior to trading on Tuesday following a weaker than expected earnings announcement. The stock had previously closed at $108.24, but opened at $102.00. Xylem shares last traded at $97.9030, with a volume of 764,895 shares changing hands.

The industrial products company reported $1.44 earnings per share (EPS) for the quarter, missing the consensus estimate of $1.45 by ($0.01). Xylem had a net margin of 11.15% and a return on equity of 11.77%. The company had revenue of $2.20 billion for the quarter, compared to the consensus estimate of $2.28 billion. During the same period last year, the firm posted $1.37 earnings per share. The company’s revenue for the quarter was down 3.0% compared to the same quarter last year.

Xylem Announces Dividend

The firm also recently announced a quarterly dividend, which was paid on Thursday, September 24th. Shareholders of record on Thursday, August 27th were issued a $0.43 dividend. This represents a $1.72 dividend on an annualized basis and a yield of 1.7%. The ex-dividend date was Thursday, August 27th. Xylem’s payout ratio is presently 40.95%.

Xylem News Summary

Here are the key news stories impacting Xylem this week:

• Positive Sentiment: Xylem reported adjusted earnings of $1.44 per share, up from $1.37 a year earlier, indicating year-over-year earnings growth despite the quarterly miss. Management characterized performance as resilient amid ongoing portfolio restructuring. Xylem Reports Solid Q3 Results Amid Portfolio Restructuring
• Neutral Sentiment: Investors had expected infrastructure demand, data-center-related growth and contributions from the TriOS acquisition to support results, while higher costs were expected to remain a headwind. These factors remain important to the outlook, but the reported revenue shortfall suggests the benefits have not fully offset other pressures. Xylem Q3 Earnings Preview
• Negative Sentiment: Third-quarter revenue was $2.20 billion, below the roughly $2.28 billion consensus estimate and down 3% from the prior-year period. EPS of $1.44 also missed estimates ranging from $1.45 to $1.47. The combination of declining sales and earnings below expectations is the primary reason the stock has weakened. Xylem Misses Q3 Earnings and Revenue Estimates
• Negative Sentiment: Analyst sentiment has also deteriorated: Stifel reduced its price target from $160 to $141, while the reported consensus target declined 10.52% to MX$2,553.80. Lower targets may reinforce concerns about near-term growth and valuation, particularly with XYL trading below its 200-day moving average. Stifel Cuts Xylem Price Target

Wall Street Analyst Weigh In

A number of brokerages recently commented on XYL. Barclays decreased their target price on Xylem from $159.00 to $139.00 and set an “overweight” rating for the company in a research report on Tuesday, October 13th. JPMorgan Chase & Co. cut their price target on Xylem from $137.00 to $118.00 and set a “neutral” rating on the stock in a report on Monday, October 19th. Robert W. Baird increased their price target on Xylem from $163.00 to $165.00 and gave the stock an “outperform” rating in a report on Wednesday, July 29th. Mizuho reduced their price objective on Xylem from $130.00 to $110.00 and set a “neutral” rating for the company in a research note on Thursday, October 15th. Finally, Jefferies Financial Group boosted their price objective on Xylem from $145.00 to $150.00 and gave the company a “buy” rating in a report on Monday, August 24th. Eight equities research analysts have rated the stock with a Buy rating and eight have issued a Hold rating to the company. Based on data from MarketBeat, the stock presently has a consensus rating of “Moderate Buy” and an average price target of $140.85.

Institutional Inflows and Outflows

Hedge funds and other institutional investors have recently bought and sold shares of the business. State Street Corp grew its stake in shares of Xylem by 2.4% in the 2nd quarter. State Street Corp now owns 11,444,669 shares of the industrial products company’s stock worth $1,352,874,000 after buying an additional 270,972 shares during the last quarter. XXEC Inc. increased its stake in Xylem by 477.9% during the first quarter. XXEC Inc. now owns 171,211 shares of the industrial products company’s stock worth $20,460,000 after acquiring an additional 141,586 shares during the last quarter. Perpetual Ltd grew its stake in shares of Xylem by 10.2% during the third quarter. Perpetual Ltd now owns 129,946 shares of the industrial products company’s stock valued at $13,160,000 after buying an additional 11,993 shares during the last quarter. NFJ Investment Group LLC bought a new stake in Xylem during the 2nd quarter valued at $4,116,000. Finally, Entropy Technologies LP raised its stake in Xylem by 45.7% in the first quarter. Entropy Technologies LP now owns 36,956 shares of the industrial products company’s stock valued at $4,416,000 after buying an additional 11,583 shares during the last quarter. Institutional investors own 87.96% of the company’s stock.

Xylem Trading Down 9.2%

The firm has a market cap of $22.96 billion, a PE ratio of 23.44, a PEG ratio of 1.75 and a beta of 1.00. The company has a debt-to-equity ratio of 0.23, a current ratio of 1.61 and a quick ratio of 1.24. The stock’s fifty day simple moving average is $106.98 and its 200-day simple moving average is $118.54.

Xylem Company Profile

Xylem Inc (NYSE: XYL) is a global water technology company that develops products and services for the transportation, treatment, testing and efficient use of water and wastewater. Its offerings support municipal water and wastewater utilities, industrial customers, commercial facilities and residential applications.

The company’s products and solutions include water and wastewater pumps, treatment systems, dewatering equipment, smart meters, monitoring and control technologies, leak detection tools, and data-driven analytics.