Xylem Inc., a global water solutions provider, reported second-quarter 2026 financial results that saw adjusted diluted earnings per share (EPS) of $1.46 beat the consensus estimate of $1.34. However, total revenue of $2.336 billion slightly missed the analyst expectation of $2.341 billion. The company highlighted a significant surge in orders, which rose 42% on a reported basis to $3.1 billion, signaling strong future demand despite the minor revenue miss.

Second-Quarter 2026 Financial Performance

The following table summarizes Xylem's key financial metrics for Q2 2026 versus Q2 2025 (in $ millions, except per share data):

Net income attributable to Xylem for the quarter was $263 million, or $1.11 per share. Net income margin increased 150 basis points to 11.3 percent. These results were driven by strong operational performance and lower restructuring and realignment costs, partially offset by increased income tax expense and loss on sale of businesses. Adjusted net income attributable to Xylem was $345 million, or $1.46 per share, which excludes purchase accounting intangible amortization, the loss on sale of businesses, restructuring and realignment costs, and special charges.

Second-quarter adjusted EBITDA margin was 23.3 percent, reflecting a year-over-year increase of 150 basis points. Productivity savings, strong price realization, and mix drove the margin expansion, exceeding the impact of inflation and lower volumes.

Revenue Breakdown by Segment (Quarter Ended June 30)

The following table presents organic revenue performance by segment for Q2 2026 versus Q2 2025 ($ millions):

Orders Performance

Orders of $3.1 billion in the second quarter were up 42% on a reported basis and 41% organically. The Water Solutions and Services segment was a primary driver, with Q2 2026 orders of $1,449 million compared to $577 million in Q2 2025, a 151% reported increase and 147% organic increase. Applied Water orders rose 10% on a reported basis (9% organically), while Water Infrastructure orders were broadly flat on a reported basis (-4% organically). Measurement and Control Solutions orders declined 2% on a reported basis, with 2% organic growth.

CEO Commentary

"The demand drivers behind our business continue to strengthen," said Matthew Pine, Xylem's CEO. "Water is becoming increasingly strategic for both utilities and industrial customers. We've spent the past several years positioning Xylem for this. Now we're seeing that strategy create new opportunities and strengthen our competitive position. With a resilient municipal foundation, increasing exposure to attractive industrial markets and a more focused portfolio, we believe Xylem is well positioned for long-term growth and profitability."

Pine further noted that growth opportunities extend across industrial markets, including AI infrastructure, semiconductors, power generation, mining, food and beverage, and life sciences, where water quality, reliability, and operational performance are essential.

Balance Sheet and Cash Flow Highlights

Key balance sheet and cash flow data as of and for the periods indicated ($ millions):

For the six months ended June 30, 2026, net cash from operating activities was $398 million (versus $338 million in the prior-year period). Capital expenditures were $(179) million for the six months ended June 30, 2026. Long-term debt issued, net was $990 million, and repurchase of common stock was $(1,243) million for the six-month period.

Full-Year 2026 Outlook

Xylem updated its full-year 2026 guidance as follows:

Xylem provides guidance only on a non-GAAP basis (excluding revenue) due to the inherent difficulty in forecasting certain amounts that would be included in GAAP earnings, such as discrete tax items, without unreasonable effort. Supplemental information on Xylem's second-quarter earnings, as well as definitions of and reconciliations for certain non-GAAP items, is available at www.xylem.com/investors .

Stifel analyst Nathan Jones has maintained a Buy rating on Xylem (NYSE: XYL) while lowering the price target. The new target is set at $157, a decrease from the previous $159.

Rating and Price Action

The firm's outlook remains positive, reflected in the Buy designation. The adjustment to the price target suggests a revised valuation for the water technology company.