Xylem Q2 Earnings Beat Estimates on Margin Gains, View Raised

Also, orders of $3.09 billion increased 42% year over year on a reported basis and 41% on an organic basis.

XYL's Segmental Details

Revenues in the Water Infrastructure segment totaled $683 million, up 5% year over year. Organic sales increased 3%, driven by strength in Transport, which more than offset weakness in Treatment and China. The Zacks Consensus Estimate was pegged at $664 million.

The Applied Water segment generated revenues of $501 million, up 4% year over year. Organic sales increased 3% in the quarter, driven by strength in the commercial end market. The Zacks Consensus Estimate was pegged at $492 million.

Quarterly revenues of the Measurement & Control Solutions segment totaled $508 million, down 6% year over year. Organic sales declined 1%, as strength in Energy Metering and VUE demand partly offset lower revenues. The Zacks Consensus Estimate was pegged at $538 million.

Quarterly revenues at the Water Solutions and Services segment totaled $644 million, up 3% year over year. Organic sales increased 1%, driven by strength in capital projects and Dewatering. The Zacks Consensus Estimate was pegged at $636 million.

XYL’s Margin Profile

Xylem’s adjusted EBITDA was $544 million, up 8.4% from the year-ago quarter’s level. The margin improved to 23.3% from 21.8% in the prior-year quarter.

Adjusted operating income was $447 million, up 11.2% year over year. Adjusted operating margin increased to 19.1% from 17.5% in the year-earlier quarter.

Xylem’s Balance Sheet and Cash Flow

Exiting the second quarter, Xylem had cash and cash equivalents of $1.28 billion compared with $1.48 billion at the end of December 2025. Long-term debt was $2.40 billion at the end of the quarter compared with $1.41 billion at the end of December 2025.

In the first six months of 2026, XYL generated net cash of $398 million from operating activities compared with $338 million in the year-ago period. Capital expenditure was $179 million, up 5.9% from the year-earlier period.

Rewards to Shareholders

In the first six months of 2026, Xylem paid dividends of $207 million, up 5.6% year over year. The company also bought back shares worth $1.24 billion in the same period compared with $13 million in the year-ago period.

XYL's 2026 Guidance

Xylem has updated its 2026 outlook. The company now expects revenues of approximately $9.2 billion compared with the previous projection of $9.2-$9.3 billion. This indicates growth of approximately 2% from the prior-year level on a reported basis and 2-3% on an organic basis.

Adjusted EBITDA margin is estimated to be approximately 23.1-23.5%, indicating an expansion of 90-130 basis points from the year-earlier actual.

XYL forecasts adjusted earnings in the range of $5.55-$5.70 per share, up from the previous guidance of $5.35-$5.60.

Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #3 (Hold). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Companies

Pentair plc PNR came out with quarterly earnings of $1.14 per share in the second quarter of 2026, beating the Zacks Consensus Estimate of $1.12 per share. This compares with earnings of $1.39 per share a year ago.

PNR posted revenues of $932.6 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 7.84%. This compares with year-ago revenues of $1.12 billion. 

WEX Inc.’s WEX adjusted earnings (excluding $2.24 from non-recurring items) in second-quarter 2026 were $5.35 per share, which surpassed the Zacks Consensus Estimate by 5.3% and increased 35.4% year over year. 

Revenues were $753.5 million, topping the consensus estimate by 1.8% and rising 14.2% year over year.

Comstock Inc. LODE came out with a quarterly loss of $0.13 per share compared with the Zacks Consensus Estimate of a loss of $0.12 in the second quarter of 2026. This compares with a loss of $0.27 per share a year ago.

LODE posted revenues of $0.27 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 80.16%. This compares with year-ago revenues of $0.34 million.

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