Xylem Inc. reports results on Tuesday 27 October, before the market opens. The analysts’ average EPS estimate for the quarter is $1.45, while the average revenue estimate stands at $2.3 billion. This report will test whether the company’s recent momentum in profitability continues to outpace its slowing top-line expansion.
What analysts expect
The consensus view for the current quarter centers on an earnings per share figure of $1.45, with individual estimates ranging from $1.40 to $1.53. For the full year, the analysts’ average EPS estimate is $5.65, representing an 11.2% increase over last year based on input from 16 analysts. This annual target has climbed 2.0% during the past 90 days. Among the recommendations provided, 14 are positive and 7 are neutral, with no negative ratings recorded.
Track record
The company has consistently exceeded expectations in recent periods. In four of the last four quarters, reported EPS surpassed the analysts’ average estimate. Most recently, actual EPS came in at $1.46 against an estimate of $1.34. This result beat the consensus by 9.2%, marking another consecutive quarter above the projected figure.
The trends going in
Revenue growth is decelerating even as profitability improves. Revenue over the twelve months to Q2 2026 reached $9.1 billion, a 4.5% rise on the year before. However, that growth rate was down 1.2 percentage points from the quarter earlier. Despite this slowdown in sales expansion, margins have expanded. The trailing operating margin stands at 14.5%, up 2.1 percentage points from a year earlier. Net income over the twelve months rose 8.5% to $1.0 billion, outpacing the revenue growth rate.
Cash generation has strengthened alongside these margin gains. Operating cash flow over the twelve months was $1.3 billion, up 6.3% on the year before. Capital spending remained disciplined at $341.0 million, or 3.7% of revenue. Consequently, free cash flow rose 9.0% to $960.0 million. This represents a free-cash-flow margin of 10.5%, an increase of 0.4 percentage points from a year earlier. The average diluted share count fell 0.7% over the same period, slightly amplifying per-share metrics.
These current levels sit comfortably within the company’s historical range but near its upper bounds. Today’s free-cash-flow margin of 10.5% is higher than 80% of past quarterly readings, which have ranged from 2.7% to 13.4%. The operating margin of 14.5% exceeds every previous reading in the dataset, which spanned from 6.5% to 13.6%. Meanwhile, the twelve-month revenue growth rate of 4.5% is higher than 50% of past readings, which have varied between −7.4% and 39.5%.
Questions this report will answer
The upcoming results will clarify whether the slowdown in revenue growth continues beyond the recent trend. They will also show whether reported figures land above or below the analysts’ expectations set out above. Finally, the data will reveal whether margins hold at the trailing levels described here.
What it means for value
Our model highlights the sensitivity of valuation to these operational levers. If growth is 5 percentage points lower than current assumptions, the calculated value drops by 28.3%. Conversely, a 5 percentage point increase in growth raises the value by 37.0%. A reduction in the free-cash-flow margin by just 1 percentage point would lower the valuation by 10.5%.
