It has been about a month since the last earnings report for Xylem (XYL). Shares have lost about 4.6% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Xylem due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Xylem Q1 Earnings Beat Estimates, Revenues Increase Y/Y
Xylem’s first-quarter 2026 adjusted earnings of $1.12 per share beat the Zacks Consensus Estimate of $1.09. The bottom line increased 9% year over year.
XYL’s revenues of $2.13 billion beat the consensus estimate of $2.11 billion. The top line increased 2.7% year over year, driven by solid demand across the Measurement & Control Solutions segment. Organic revenues were flat in the quarter.
Also, orders of $2.23 billion increased 3% year over year on a reported basis and were flat on an organic basis.
Segmental Details
Revenues in the Water Infrastructure segment totaled $603 million, up 4% year over year. Organic sales declined 1% year over year due to a decrease in demand for its products and solutions for the treatment of water. The Zacks Consensus Estimate was pegged at $599 million.
The Applied Water segment generated revenues of $448 million, up 3% year over year. Organic sales were flat in the quarter. The segmental performance was driven by strength in the commercial end market. The consensus estimate was pegged at $444 million.
Quarterly revenues of the Measurement & Control Solutions segment totaled $508 million, up 4% year over year. The Zacks Consensus Estimate was pegged at $493 million. Organic sales were up 1% year over year, driven by an increase in energy metering demand.
Quarterly revenues at the Water Solutions and Services segment totaled $566 million, up 1% year over year. Organic sales were down 2% year over year, due to a decrease in capital projects. The consensus estimate was pegged at $578 million.
Margin Profile
Xylem’s adjusted EBITDA was $437 million, up 3.3% from the year-ago quarter’s level. The margin improved to 20.6% from 20.4% in the prior-year quarter.
Adjusted operating income was $342 million, up 5.2% year over year. Adjusted operating margin increased to 16.1% from 15.7% in the year-earlier quarter.
Xylem’s Balance Sheet and Cash Flow
Exiting the first quarter, Xylem had cash and cash equivalents of $808 million compared with $1.48 billion at the end of December 2025. Long-term debt was $1.41 billion at the end of the quarter, flat compared with the figure reported at the end of December 2025.
In the first three months of 2026, XYL generated net cash of $108 million from operating activities compared with $33 million in the year-ago period. Capital expenditure was $90 million, up 26.8% from the year-earlier period.
Rewards to Shareholders
In the first three months of 2026, Xylem paid dividends of $106 million, up 8.2% year over year. The company also bought back shares worth $563 million in the same period compared with $13 million in the year-ago period.
2026 Guidance
Xylem has updated its 2026 outlook. The company now expects revenues to be $9.2-$9.3 billion for 2026 compared with $9.1-$9.2 billion anticipated earlier. This indicates an increase of 2-3% from the prior-year level on a reported basis and 2-4% on an organic basis.
Adjusted EBITDA margin is estimated to be approximately 22.9-23.3%, indicating an expansion of 70-110 basis points from the year-earlier actual.
It forecasts adjusted earnings to be in the range of $5.35-$5.60 per share.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a flat trend in estimates revision.
VGM Scores
Currently, Xylem has a average Growth Score of C, a score with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Xylem has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Xylem Inc. (XYL): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).