Xylem Cuts 2026 Profit Outlook as Shares Hit 52-Week Low
Xylem lowered its 2026 adjusted EPS forecast to $5.40–$5.45 from $5.55–$5.70 and revenue guidance to $8.95 billion from $9.2 billion. Shares were down 11.79% at $95.47, a new 52-week low, at publication.
Xylem Inc. (NYSE: XYL ) stock fell Tuesday after the water technology company reported weaker-than-expected third-quarter results and issued fourth-quarter guidance below Wall Street estimates. Adjusted earnings per share came in at $1.44, missing the analyst consensus estimate of $1.45. Revenue totaled $2.201 billion, below expectations of $2.276 billion.
Orders Rise Despite Flat Organic Revenue Organic revenue was largely unchanged from a year earlier as weakness in Measurement and Control Solutions, Water Infrastructure and Water Solutions and Services offset gains in other businesses. Organic orders rose 10%, driven by demand for metering solutions and data center projects. Backlog increased 13% to $5.5 billion. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) margin expanded 70 basis points to 23.9%, supported by pricing and productivity improvements.
Free cash flow totaled $444 million, while net debt to adjusted EBITDA increased to 1.1 times following share repurchases. Segment Performance Measurement and Control Solutions: Organic orders surged 30%, while organic revenue declined 5%. Adjusted EBITDA margin expanded 270 basis points to 24.5%. The segment’s $1.3 billion backlog supports deployments in late 2027 and 2028.
Water Infrastructure: Organic orders fell 1% amid treatment project delays and weakness in China. Water Infrastructure organic revenue declined 1%, while adjusted EBITDA margin improved 180 basis points to 26.2%. Applied Water: Organic orders rose 15%, with data center orders increasing more than 200%. Organic revenue grew 9%, while adjusted EBITDA margin contracted 40 basis points because of inflation, product mix and growth investments.
Water Solutions and Services: Organic orders increased 6%, but organic revenue declined 2% amid slower project ramp-ups. Adjusted EBITDA margin fell 140 basis points to 24.9%. Management attributed the weakness to project timing rather than slowing demand. See More: Top Value Stocks Xylem Announces Portfolio Changes, Targets Growth Opportunities Xylem plans to divest its Applied Water International and Specialty Flow Control businesses, including beverage and marine operations, as part of a broader portfolio restructuring.
The company will transition to a three-segment reporting structure effective Jan. 1, 2027. The businesses slated for divestiture account for about 9% of revenue but less than 5% of EBITDA. The changes are expected to reduce China’s share of company revenue to 1% from 2%.
Beginning in 2027, Xylem plans to direct capital toward higher-growth, higher-margin markets through its three reporting segments. The company also secured an ultrapure water treatment project for a leading semiconductor manufacturer’s fabrication facility in the United States. Separately, Xylem is expanding its relationship with Amazon.com, Inc. (NASDAQ: AMZN ) to provide water treatment solutions for data centers worldwide.
Xylem Cuts 2026 Guidance Xylem lowered its full-year adjusted earnings guidance to $5.40 to $5.45 per share from its previous forecast of $5.55 to $5.70. The revised outlook falls below the analyst consensus estimate of $5.66 per share. The company also reduced its 2026 revenue forecast to $8.95 billion from $9.2 billion, compared with Wall Street expectations of $9.191 billion. Xylem now expects flat organic revenue growth, down from its previous forecast of 2% to 3% growth.
Adjusted EBITDA margin is projected to reach 23.2%, an improvement of 100 basis points. Free cash flow margin is expected to be 10.2%, at the low end of the company’s previous guidance range. Fourth-Quarter Outlook Falls Short of Estimates For the fourth quarter, Xylem expects adjusted earnings of $1.39 to $1.44 per share, below the analyst consensus estimate of $1.63. The company forecasts revenue of $2.3 billion, compared with expectations of $2.446 billion.
Revenue is expected to decline 5% from a year earlier, with organic revenue falling 1% to 2%. Adjusted EBITDA margin is projected to reach 24.5%, up 130 basis points. Measurement and Control Solutions revenue is expected to decline sequentially before stabilizing. Water Solutions and Services is projected to return to low-single-digit growth despite continued timing challenges involving large projects.
XYL Price Action: Xylem shares were down 11.79% at $95.47 at the time of publication on Tuesday. The stock is trading at a new 52-week low, according to Pro data. Photo via Shutterstock Read Also: Coca-Cola Raises Profit Outlook, but Warns Consumer Pressures Could Persist Into 2027