Thursday, November 14, 2024

Water Infrastructure Stocks Q3 Teardown: Xylem (NYSE:XYL) Vs The Rest

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As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the water infrastructure industry, including Xylem (NYSE:XYL) and its peers.

Trends towards conservation and reducing groundwater depletion are putting water infrastructure and treatment products front and center. Companies that can innovate and create solutions–especially automated or connected solutions–to address these thematic trends will create incremental demand and speed up replacement cycles. On the other hand, water infrastructure and treatment companies are at the whim of economic cycles. Consumer spending and interest rates, for example, can greatly impact the industrial production that drives demand for these companies’ offerings.

The 5 water infrastructure stocks we track reported a satisfactory Q3. As a group, revenues were in line with analysts’ consensus estimates.

In light of this news, share prices of the companies have held steady as they are up 4.9% on average since the latest earnings results.

Formed through a spinoff, Xylem (NYSE:XYL) manufactures and services engineered products across a wide variety of applications primarily in the water sector.

Xylem reported revenues of $2.10 billion, up 1.3% year on year. This print fell short of analysts’ expectations by 3.2%. Overall, it was a slower quarter for the company with a miss of analysts’ organic revenue and operating margin estimates.

“The team delivered strong results in the quarter, with earnings at the high end of guidance, and margin expansion beating our expectations,” said Matthew Pine, Xylem’s President and CEO.

Xylem Total Revenue

Xylem delivered the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update of the whole group. Unsurprisingly, the stock is down 6% since reporting and currently trades at $122.54.

Is now the time to buy Xylem? Access our full analysis of the earnings results here, it’s free.

As one of the oldest companies in the water infrastructure industry, Mueller (NYSE:MWA) is a provider of water infrastructure products and flow control systems for various sectors.

Mueller Water Products reported revenues of $348.2 million, up 15.5% year on year, outperforming analysts’ expectations by 6.5%. The business had a very strong quarter with an impressive beat of analysts’ organic revenue and EBITDA estimates.

Mueller Water Products Total Revenue
Mueller Water Products Total Revenue

Mueller Water Products achieved the biggest analyst estimates beat and fastest revenue growth among its peers. However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $24.15.

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