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"We rate XYLEM INC (XYL) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, compelling growth in net income, good cash flow from operations and solid stock price performance. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- XYL's revenue growth has slightly outpaced the industry average of 4.2%. Since the same quarter one year prior, revenues slightly increased by 4.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.55, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, XYL has a quick ratio of 1.51, which demonstrates the ability of the company to cover short-term liquidity needs.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 87.0% when compared to the same quarter one year prior, rising from $46.00 million to $86.00 million.
- Net operating cash flow has significantly increased by 80.95% to $76.00 million when compared to the same quarter last year. In addition, XYLEM INC has also vastly surpassed the industry average cash flow growth rate of -24.43%.
- Powered by its strong earnings growth of 88.00% and other important driving factors, this stock has surged by 29.64% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: XYL Ratings Report