Abstract

Xylem will report its second-quarter results on July 28, 2026, Pre-MKt; the preview below distills consensus and company-guided expectations for revenue, margins, and adjusted EPS alongside segment highlights and analyst sentiment.

Market Forecast

Consensus and the company’s latest outlook point to second-quarter revenue of 2.34 billion US dollars, EPS of 1.34, and EBIT of 417.54 million US dollars. Year-over-year, revenue is forecast to grow by 5.84%, with EPS up 15.65% and EBIT up 16.01%. Management’s prior disclosures imply steady margin progress; Street models embed a mixed margin profile with gross margin broadly stable and net profitability improving year over year. The company’s portfolio remains balanced across utility networks, measurement and control, and water infrastructure projects, with project execution and backlog conversion as highlights this quarter. The most promising segment, Water Infrastructure, is positioned to contribute about 603.00 million US dollars with resilient public-utility demand and a year-over-year uptick implied by order trends.

Last Quarter Review

Xylem’s last reported quarter delivered revenue of 2.13 billion US dollars, a gross profit margin of 37.79%, GAAP net profit attributable to shareholders of 193.00 million US dollars, a net profit margin of 9.08%, and adjusted EPS of 1.12, with revenue up 2.71% year over year and adjusted EPS up 8.74% year over year. Quarter-on-quarter, net profit growth was -42.39%, reflecting typical seasonal patterns and mix effects. The main businesses were diversified: Water Infrastructure at 603.00 million US dollars, Water Solutions and Services at 566.00 million US dollars, Measurement and Control Solutions at 508.00 million US dollars, and Applied Water at 448.00 million US dollars, with utilities backlog execution underpinning infrastructure and services.

Current Quarter Outlook (with major analytical insights)

Main business: Utility-facing solutions and services

The core of this quarter’s narrative is the utility-oriented mix spanning Water Infrastructure and Water Solutions and Services. These units are exposed to capital cycles and municipal budgets, but they also benefit from multi-year funding visibility and resilient replacement demand. With revenue last quarter of 603.00 million and 566.00 million US dollars respectively, execution against funded backlogs and aftermarket pull-through should be the primary revenue driver. Pricing discipline and supply-chain normalization remain central to margin delivery. If component inflation and logistics costs stabilize as expected, gross margin can hold near the prior 37.79% level even with incremental mix headwinds. Net margin sensitivity is higher to volume leverage and service mix; successful conversion of high-margin monitoring, analytics, and optimization offerings would support the modeled improvement in net profitability versus last year. Project timing is the swing factor. Larger treatment and network projects can shift between months, creating quarterly revenue volatility. However, the breadth of the portfolio, supplemented by retrofit and aftermarket work, should cushion timing effects. On balance, the guidance-aligned revenue pace of roughly 2.34 billion US dollars appears achievable given the backlog profile and the cadence seen in the prior quarter.

Most promising business: Measurement and Control Solutions

Measurement and Control Solutions at 508.00 million US dollars last quarter stands out for multi-year digitization trends among utilities and industrial users. Demand for advanced metering infrastructure, remote monitoring, and analytics continues to rise as customers target non-revenue water reduction, leak detection, and efficiency gains. This secular tailwind provides a structural growth layer beyond cyclical capital upgrades. The revenue quality in this segment is typically higher due to software, analytics, and recurring services, supporting better margin conversion as deployments scale. That dynamic can contribute positively to both EBIT and EPS versus the year-ago quarter, consistent with forecast growth of 16.01% in EBIT and 15.65% in EPS. As deployment schedules normalize and supply constraints abate, we expect higher year-over-year throughput and improved delivery linearity, improving working-capital turns and cash conversion. Key risks include elongated customer acceptance cycles and regulatory approval timelines for smart infrastructure, which can defer revenue recognition. Even so, the combination of regulatory impetus for water-loss mitigation and the need for data-driven asset management supports sustained orders. For this quarter, a moderate acceleration in shipments and software attach rates should be a positive margin lever if realized.

Stock-price sensitivities this quarter

Margin commentary will likely drive the stock reaction more than the revenue print. With consensus already embedding 5.84% revenue growth, upside or downside surprise may hinge on gross margin direction relative to the prior 37.79% and on the net margin path toward or above last year’s 9.08%. Clear signals on pricing retention, procurement savings, and product mix will be closely watched. Orders and backlog conversion are the second key swing factor. Investors will look for qualitative and quantitative updates on public-utility project releases and on the cadence of large orders in infrastructure. Positive commentary on awarded projects, lead times, and delivery pacing could raise confidence in the second-half run-rate and support multiple expansion. Lastly, capital allocation and integration updates will influence sentiment. Any shift in buyback cadence, tuck-in M&A for digital capabilities, or capex commitments toward manufacturing and R&D could affect EPS trajectories beyond the quarter. Clarity on free cash flow conversion, including working-capital normalization tied to inventory and receivables, would further inform the earnings quality debate.

Analyst Opinions

Across recent institutional commentary, the prevailing stance is bullish, with a majority of analysts emphasizing consistent backlog execution, stable municipal funding, and incremental margin expansion from pricing and mix normalization. Several well-followed brokerages highlight the improving earnings power implied by the expected 15.65% EPS growth and 16.01% EBIT growth year over year for the quarter. Analysts note that Water Infrastructure and digital Measurement and Control provide complementary growth engines: the former leveraging resilient utility capex cycles and the latter capitalizing on smart-network adoption. Commentary flags that revenue growth near 5.84% is modest, but the margin structure is improving as supply chain frictions ease and as higher-value software and analytics layers scale. Bullish notes also point out that the services and aftermarket base can mitigate project timing risk, sustaining a steadier quarterly cadence. On balance, positive views outnumber cautious takes, with upbeat expectations anchored to mid-single-digit revenue growth translating into double-digit profit growth. The market will scrutinize margin guidance and any color on orders, but the consensus tilt remains positive heading into July 28, 2026 Pre-MKt.