Xylem Stock Exhibits Strong Prospects Despite Persisting Headwinds

Xylem Inc. XYL is poised to benefit from growth across most of its businesses. The Measurement & Control Solutions (M&CS) segment is benefiting from robust demand for advanced technology solutions like smart metering and other applications, primarily in the United States. Growth in the transport application business, driven by the increased infrastructure projects in the United States, is boosting the Water Infrastructure segment’s performance. Strong momentum in the treatment applications business, supported by increasing capital projects in emerging markets, also bodes well. A strong pipeline of capital projects and strength in the dewatering applications business in the emerging markets are aiding the performance of the Water Solutions and Services segment.XYL solidified its product portfolio and leveraged business opportunities through asset additions. In December 2024, the company completed the acquisition of a majority stake in Idrica. The inclusion of Idrica’s technology will offer growth opportunities for Xylem and will enable it to penetrate new markets and deliver intelligent solutions to its customers. The company acquired mission-critical water treatment solutions and services provider Evoqua in May 2023. Evoqua’s advanced water and wastewater treatment capabilities and position in key industrial markets complement Xylem’s portfolio of solutions across the water cycle.Xylem’s commitment to rewarding shareholders through dividends and share buybacks is encouraging. In 2024, XYL paid dividends of $350 million, up 17.1% year over year. The company also bought back shares worth $20 million in the same period. In February 2025, it hiked its dividend by 1.1%. In the year-to-date period, this Zacks Rank #3 (Hold) company’s shares have gained 6.6% compared with the industry’s 6.2% growth.Image Source: Zacks Investment ResearchDownsides of XYLXylem has been experiencing weakness in the Applied Water segment. Lower demand for industrial and building solutions applications, including pumps, valves, heat exchangers, controls and dispensing equipment, is worrisome for the segment. A reduced number of project wins may impact the segment’s performance in the quarters ahead.Xylem has been grappling with the adverse impacts of cost inflation. In 2024, the company’s cost of revenues increased 15.1% year over year due to high raw material, labor, freight and overhead costs. Selling, general and administrative expenses rose 8.8% due to additional operational expenditure from the acquisition of Evoqua. Escalating costs pose a threat to the company’s bottom line.Stocks to ConsiderSome better-ranked companies are discussed below.RBC Bearings Incorporated RBC currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.RBC delivered a trailing four-quarter average earnings surprise of 4.9%. In the past 60 days, the Zacks Consensus Estimate for RBC’s fiscal 2025 earnings has increased 1.2%.Enersys ENS presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter average earnings surprise of 2.2%.In the past 60 days, the consensus estimate for ENS’ fiscal 2025 earnings has increased 7.2%.The Middleby Corporation MIDD presently carries a Zacks Rank of 2. MIDD delivered a trailing four-quarter average earnings surprise of 1.9%.In the past 60 days, the consensus estimate for MIDD’s 2025 earnings has inched up 0.8%.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report RBC Bearings Incorporated (RBC): Free Stock Analysis Report The Middleby Corporation (MIDD): Free Stock Analysis Report Enersys (ENS): Free Stock Analysis Report Xylem Inc. (XYL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks