Xylem Misses Q3 Revenue and Cuts 2026 Outlook, Shares Fall 14% to 52-Week Low

XYL reported third-quarter 2026 results on October 27 that missed on revenue and cut the full-year outlook, and the stock closed about 14% lower at $92.86, a new 52-week low. Revenue was $2.20 billion, down 3% on a reported basis and flat organically, against a $2.28 billion consensus. Adjusted EPS was $1.44, up 5% from $1.37 a year earlier but a cent below the $1.45 consensus. GAAP EPS was $1.25, up 34%.

The guidance reset mattered more than the quarter. Xylem now expects 2026 revenue of about $8.95 billion, down 1% reported and flat organically, versus prior guidance of up 2% reported and 2% to 3% organic. Adjusted EPS guidance fell to $5.40 to $5.45 from $5.55 to $5.70, and the adjusted EBITDA margin is still expected at about 23.2%, up roughly 100 basis points. Management pointed to project timing and more cautious spending, saying demand is converting to revenue more slowly and that some municipal utilities are deferring discretionary purchases.

The order book looks stronger than the revenue line. Orders were $2.3 billion, up 10% organically and 7% reported, and backlog was reported at $5.5 billion, up 13% organically. Growth was uneven: Measurement & Control Solutions orders rose 30% organically and Applied Water 15%, while Water Infrastructure orders fell 1%. Third-quarter adjusted EBITDA margin rose 70 basis points to 23.9%, which management attributed to productivity and pricing.

The release also announced strategic actions, including plans to sell Applied Water International and Specialty Flow Control and a move from four segments to three starting January 1, 2027. What to watch: whether backlog converts to revenue on the timeline management describes, whether municipal spending stabilizes, and how the planned divestitures change the revenue base.