The EPS beat and raised EPS guidance support the stock, but the revenue guidance trim introduces caution on top-line momentum. Monitor H2 organic revenue conversion and segment mix, especially if Water Solutions order surge translates to sustained revenue. The aggressive buyback ($1.24B YTD) provides EPS tailwind but reduces equity cushion.
Price Chart
Executive Summary
Xylem reported Q2 2026 adjusted EPS of $1.46, beating consensus of $1.34 by 9%, while revenue of $2.34B was in line. Full-year adjusted EPS guidance was raised to $5.55-$5.70, but revenue guidance was narrowed to ~$9.2B (2% growth), trimming the prior range. Orders surged 42% on a reported basis, driven by a 147% organic jump in Water Solutions and Services, signaling strong demand but uneven top-line conversion.
Key Financial Metrics
Key Facts
- Q2 revenue $2.336B, up 2% reported, 1% organic YoY
- GAAP EPS $1.11, up 19% YoY; adjusted EPS $1.46, up 16% YoY
- Adjusted EPS beat consensus $1.34 by ~9%
- Orders $3.1B, up 42% reported, 41% organic (Water Solutions +147% organic)
- Adjusted EBITDA margin 23.3%, up 150 bps YoY
- FY2026 revenue guidance narrowed to ~$9.2B (2% reported growth, prior 2-3%)
- FY2026 adjusted EPS guidance raised to $5.55-$5.70 (prior $5.35-$5.60)
- FY2026 adjusted EBITDA margin guidance raised to 23.1-23.5% (prior 22.9-23.3%)
- Net income attributable to Xylem $263M vs $226M YoY
- Share repurchases of $1.24B YTD through June 30, reducing diluted share count to 236.6M
Financial Impact
EPS beat of ~9% and raised EPS guidance are positive, but revenue guidance trim of ~0.5-1% at the midpoint is a modest negative. Net impact likely modestly positive given margin expansion and strong orders.
Risk Factors
- Revenue growth slowing to 2% reported despite 42% order growth — conversion risk
- Full-year organic revenue guidance trimmed to 2-3% from 2-4%
- Loss on sale of businesses ($16M in Q2) and restructuring costs ($11M) weigh on GAAP results
- Increased long-term debt ($2.4B vs $1.4B year-end 2025) from debt issuance to fund buybacks
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 6 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 8-K Filing (Primary) | 0001524472-26-000108 |
| Document: xyl-20260728.htm | 0001524472-26-000108 |
| Document: 0001524472-26-000108-index-headers.html | 0001524472-26-000108 |
| Document: 0001524472-26-000108-index.html | 0001524472-26-000108 |
| Document: 0001524472-26-000108.txt | 0001524472-26-000108 |
| 8-K Data (Synthetic) | 0001524472-26-000108 |
Filters
| Type | Now | ||||
|---|---|---|---|---|---|
Sep 15, 2026 17d ago | 424B5 | $107.50 $107.56 | ▲ +0.06% | ▼ −0.76% | $102.22 (−4.91%) |
Jul 28, 2026 9w ago | 8-K | $124.97 $119.08 | ▼ −4.71% | ▼ −6.98% | $102.22 (−18.20%) |
May 19, 2026 19w ago | 424B5 | $106.28 $110.01 | ▲ +3.51% | ▲ +1.21% | $102.22 (−3.82%) |
May 4, 2026 21w ago | Insider Cluster | $114.83 $111.93 | ▼ −2.53% | ▼ −5.46% | $102.22 (−10.98%) |
Mar 30, 2026 26w ago | DEFA14A | $116.05 $124.20 | ▲ +7.02% | ▲ +2.72% | $102.22 (−11.92%) |
Feb 25, 2026 31w ago | 8-K | $131.89 $126.01 | ▼ −4.46% | ▼ −3.33% | $102.22 (−22.49%) |
US Market Status
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