Abstract

Xylem will report quarterly results on April 28, 2026, Pre-Market, and current projections point to year-over-year growth in revenue and adjusted EPS alongside stable operating execution.

Market Forecast

Current-quarter expectations indicate revenue of 2.11 billion US dollars, up 3.48% year over year, adjusted EPS of 1.09 US dollars, up 13.85%, and EBIT of 327.54 million US dollars, up 9.44%. Margin forecasts were not specified, so the trajectory will hinge on price realization and productivity versus mix and inflation. The main business outlook centers on steady orders and disciplined pricing, while the most promising near-term opportunity remains smart metering and analytics within Measurement and Control Solutions, where full-year 2025 revenue was 2.10 billion US dollars, up 11.50% year over year.

Last Quarter Review

Xylem delivered revenue of 2.40 billion US dollars, up 6.25% year over year; a gross profit margin of 38.88%; GAAP net income attributable to shareholders of 335.00 million US dollars with a net profit margin of 13.98%; and adjusted EPS of 1.42 US dollars, up 20.34% year over year. One notable highlight was execution against expectations: revenue exceeded estimates by 22.63 million US dollars and adjusted EPS exceeded estimates by 0.01 US dollars, reflecting pricing discipline and operating leverage. By business line in full-year 2025, Water Infrastructure posted 2.60 billion US dollars (+3.20% YoY), Water Solutions and Services 2.50 billion US dollars (+5.20%), Measurement and Control Solutions 2.10 billion US dollars (+11.50%), and Applied Water 1.80 billion US dollars (+3.10%), underscoring the outperformance of analytics and metering.

Current Quarter Outlook

Main business this quarter

Revenue for the upcoming print is expected to rise modestly year over year to 2.11 billion US dollars, with profitability influenced by the balance of price/cost, mix in large equipment versus aftermarket and services, and ongoing productivity. The company exited 2025 with margin momentum supported by productivity savings and price realization, and those levers remain fundamental as 2026 begins. As a result, even with a tempered top-line trajectory, adjusted EPS is projected to expand faster than revenue, reflecting operating discipline. The conversion of the reported year-end backlog provides a demand anchor. Management disclosed a 4.60 billion US dollars total backlog at December 31, 2025, with more than 60% expected to convert to revenue over 2026—giving added visibility to order fulfillment and factory loading in the first half. Given historical execution, that backlog should help keep utilization and price capture stable as projects progress through shipment and commissioning milestones. Within the quarter, the most sensitive swing factors are the timing of smart-meter and analytics project rollouts, the cadence of municipal equipment orders, and China utility spending patterns. Commentary from recent research notes indicates that some smart-meter projects deferred from the fourth quarter into the first half of 2026 could still make this quarter’s mix choppy; however, those same projects also underpin the second-half uplift. In parallel, disciplined portfolio rationalization and cost actions executed in 2025 support a cleaner footprint for 2026 and improved margin resiliency if revenue growth skews to software, analytics and services.

Most promising segment this quarter

Measurement and Control Solutions remains the most promising growth engine, as indicated by its 11.50% full-year 2025 revenue growth to 2.10 billion US dollars and continued momentum in advanced metering infrastructure, networked sensors, and analytics. The near-term setup has two moving parts: deferred projects that push revenue recognition out of late 2025 into the first half of 2026, and an expanding pipeline tied to digital water investments. Even if some deployments occur later in the year, orders and software-rich content support higher-margin mix across the platform. Another area to watch is cross-portfolio exposure to data center-related water management, called out in recent research notes as a growing tailwind. As new facilities add capacity, projects for thermal management, water reuse, and monitoring can broaden opportunities across both Water Infrastructure and Applied Water. While the quarter-to-quarter revenue impact may be incremental, the mix generally favors higher-value solutions and services, aligning with the company’s emphasis on lifecycle support and digital add-ons. Finally, Water Solutions and Services, at 2.50 billion US dollars for full-year 2025 and up 5.20% year over year, continues to reinforce the installed base through maintenance, upgrades, and optimization contracts. In periods where heavy equipment shipments are steadier than accelerating, this recurring and services-leaning revenue helps stabilize gross margin and supports EBIT conversion. In aggregate, these dynamics help balance the quarter even if pockets of end-market demand remain uneven.

Stock-price drivers this quarter

Stock performance into the print is likely to track three catalysts: delivery against the modest revenue growth bar, confirmation of margin carryover from 2025 productivity initiatives, and updates on project timing in smart metering and analytics. If revenue lands near the 2.11 billion US dollars mark with continued price realization and productivity, investors may reward the quality of earnings and the visibility into second-half acceleration in Measurement and Control Solutions. Capital deployment adds a supportive layer. The board authorized up to 1.50 billion US dollars in share repurchases effective in late February 2026, creating a tool to offset dilution and to complement organic investments. Execution against this authorization, if activity has started, can lift per-share metrics and signal confidence in the multiyear earnings path. Combined with restructuring actions implemented in 2025 that target annual future net savings of approximately 80.00–120.00 million US dollars beginning in 2026, free-cash-flow conversion and margin expansion remain central to the equity narrative. Finally, guidance color will matter as much as the reported figures. Investors will look for updated commentary on the trajectory of 2026 revenue growth, which was outlined as 1%–3% in February, and on the conversion rate of year-end backlog through the first half. Clearer timelines on deferred smart-meter projects and any incremental demand from data center-related water management would help refine the intra-year slope and reduce uncertainty around quarterly cadence.

Analyst Opinions

Across recent notes published between January and April, the balance of ratings skews noticeably positive, with approximately 75% of opinions bullish versus 25% neutral or cautious. The majority view emphasizes an intact multi-quarter earnings trajectory driven by digital adoption, disciplined price/cost execution, and backlog conversion, despite a slower start to the year for certain projects. Oppenheimer maintained an Outperform rating and adjusted its price target to 160.00 US dollars, framing Xylem as a structural grower that should see sequential improvement as Measurement and Control Solutions activity accelerates later in the year. The firm also highlighted the potential broadening of data center tailwinds across both core equipment and applied water workflows as water management complexity increases with capacity additions. This view supports the premise that mix can tilt toward higher-value, software- and analytics-enabled solutions that are beneficial for margin quality. JPMorgan reaffirmed an Overweight rating with a 160.00 US dollars target, reinforcing confidence in the company’s execution levers: price discipline, productivity, and a clearer, streamlined portfolio following prior 80/20 rationalization. Their stance suggests that, while near-term revenue growth is moderate, earnings resilience should be evident through consistent EBIT and EPS improvement relative to the top line. This underpins the consensus expectation for adjusted EPS growth of 13.85% year over year this quarter, outpacing the 3.48% revenue growth rate. RBC Capital reiterated an Outperform rating with a 157.00 US dollars target, citing durable demand across segments and an advantageous shift toward software, analytics, and services that can improve recurring revenue and gross margin stability. The firm’s take complements the constructive narrative by focusing on the quality of earnings and the incremental impact of service and digital content on profitability, especially as project phasing normalizes through the year. Argus maintained a Buy rating while lowering its target to 150.00 US dollars, noting that shares remain supported by the consistency of operational delivery and visibility from backlog. Even with a trimmed target, their constructive stance aligns with the broader majority view: the company’s earnings power appears poised to compound through ongoing productivity and pricing actions, with upside if smart-meter deployments re-accelerate earlier than expected. William Blair also reiterated a positive stance, highlighting momentum in Measurement and Control Solutions and pointing out that a cautious full-year outlook sets a bar that is achievable with execution on project timing and cost programs. Paired with the announced 1.50 billion US dollars share repurchase authorization and targeted restructuring savings of 80.00–120.00 million US dollars annually beginning in 2026, this suggests more durable EPS and free-cash-flow delivery even in a mid-single-digit revenue growth environment. In sum, the majority of institutional commentary points to a favorable setup: expectations for the quarter are measured, but underlying drivers—backlog conversion, digital and analytics content, and disciplined price/cost—support EBIT and EPS expansion. If management confirms that deferred smart-meter projects are tracking to plan and that margin tailwinds from productivity and mix are holding, the majority bullish camp expects solid follow-through in the second half. That framing is consistent with current-quarter projections of 2.11 billion US dollars in revenue, 327.54 million US dollars in EBIT, and 1.09 US dollars in adjusted EPS, which collectively reflect an earnings profile that continues to compound even as top-line growth remains moderate.