Group 1 - The article provides a market analysis covering key players in the industry, including Johnson Controls International PLC, Eaton Corporation PLC, Xylem Inc, and Nuscale Power Corp [1] - The analysis highlights the investment opportunities and market trends associated with these companies, indicating a growing interest in sustainable and energy-efficient solutions [1] - It emphasizes the importance of technological advancements and regulatory support in driving growth within the sectors these companies operate in [1] Group 2 - Johnson Controls International PLC is noted for its innovations in building technologies and energy solutions, positioning itself as a leader in the smart building market [1] - Eaton Corporation PLC is recognized for its focus on electrical and industrial solutions, which are critical for enhancing energy efficiency and sustainability [1] - Xylem Inc is highlighted for its water technology solutions, addressing global water challenges and promoting sustainable water management practices [1] - Nuscale Power Corp is mentioned for its development of small modular reactors, which represent a significant advancement in nuclear energy technology [1]

Company Overview - Xylem Inc. is a leading global water-technology company that designs, manufactures, and services engineered products and solutions for various clients including public utilities, industrial, residential, commercial, and agricultural sectors worldwide [1] - The company is headquartered in Washington, D.C., and operates through key segments such as Water Infrastructure, Applied Water, Measurement & Control Solutions, and Water Solutions & Services [1] - Xylem has a market capitalization of $33.7 billion, categorizing it as a large-cap stock within the specialty industrial machinery industry [2] Stock Performance - Xylem's stock has slipped 10.3% from its 52-week high of $154.27, achieved on October 30 [3] - Over the past three months, XYL stock has declined by 1.2%, underperforming the S&P 500 Index, which gained 5.4% during the same period [3] - Year-to-date, Xylem shares have risen by 19.2%, outperforming the S&P 500's YTD gains of 16.4% [4] - However, over the past 52 weeks, XYL has climbed only 9.5%, underperforming the S&P 500's 12.4% returns [4] Financial Performance - In the most recent quarter (Q3 2025), Xylem reported revenue of $2.3 billion, reflecting an 8% increase, while adjusted EPS was $1.37, marking a 23% increase compared to the prior-year quarter [5] - The stock's performance in 2025 has been attributed to stable financial results driven by demand for water management solutions, successful pricing/productivity gains, and strategic investments [5] Competitive Landscape - Parker-Hannifin Corporation has outperformed Xylem, achieving 38.3% returns year-to-date and 26.4% gains over the past year [6] - Xylem's stock has a consensus "Moderate Buy" rating from 21 analysts, with a mean price target of $170.62, indicating a potential upside of 23.4% from current price levels [6]

Core Insights - Flocean, a Norwegian subsea desalination company, has been recognized as a TIME Best Invention of 2025 [1] - The company has extended its total Series A funding to $22.5 million (NOK 228 million) [1] - Xylem Inc. has joined as a strategic investor in this funding round, alongside existing investors and new investors [1] Funding Details - The Series A funding extension amounts to $22.5 million (NOK 228 million) [1] - New strategic investor Xylem Inc. (NYSE: XYL) has been added to the list of backers [1] - Existing investors include Burnt Island Ventures, Freebird Capital, Katapult Ocean, and Nysnø Climate Investments, with new investors such as Ari Emanuel, Orion, Rypples, and Wellers Impact's Water Unite Impact Fund [1]

Core Points - Xylem Inc. has declared a fourth quarter dividend of $0.40 per share, payable on December 23, 2025, to shareholders of record as of November 25, 2025 [1] - Xylem is a leading global water solutions company with 23,000 employees and reported revenue of $8.6 billion in 2024 [2] - The company reported third-quarter 2025 revenue of $2.3 billion, with earnings per share increasing by 4% on a reported basis and 23% on an adjusted basis [5] Company Overview - Xylem Inc. is a Fortune 500 company focused on water solutions, aiming to create a more water-secure world [2] - The company emphasizes innovation and expertise in optimizing water and resource management [2] Financial Performance - In 2024, Xylem achieved total revenue of $8.6 billion, showcasing strong execution and demand [2] - For the third quarter of 2025, the company reported revenue of $2.3 billion, indicating robust performance [5] - Earnings per share for the third quarter increased by 4% on a reported basis and 23% on an adjusted basis, reflecting effective management and operational execution [5]

Industry Overview - The U.S. Business Services Sector is supported by strong domestic economic fundamentals, encompassing companies that provide consulting, staffing, financial transactions, outsourcing, advertising, waste removal, building maintenance, technology services, and auction/valuation services [1] - The sector has evolved into a mature and resilient ecosystem, with revenues, income, and cash flows now above pre-pandemic levels [2] - The rapid advancement and adoption of artificial intelligence and automation technologies are reshaping the delivery of business services [2] Sector Performance - The Zacks-defined Business Services Sector ranks in the top 38% of the Zacks Sector Rank, indicating an expectation to outperform the market over the next three to six months [3] Recommended Stocks - Five business services stocks with favorable Zacks Rank are recommended: Xylem Inc. (XYL), Thomson Reuters Corp. (TRI), UL Solutions Inc. (ULS), Omnicom Group Inc. (OMC), and Veralto Corp. (VLTO), all carrying a Zacks Rank 2 (Buy) [4] Company Insights Xylem Inc. (XYL) - Xylem experiences steady demand due to the essential nature of its offerings, benefiting from robust demand for smart metering and applications in the U.S. [5] - The Water Infrastructure unit's performance is boosted by growth in transport and treatment application businesses, with an expected revenue growth rate of 3.7% and earnings growth rate of 9.6% for next year [6] Thomson Reuters Corp. (TRI) - Thomson Reuters is a leading provider of value-added information and technology across various sectors, including law, tax, accounting, and healthcare [7] - The company has an expected revenue growth rate of 7.8% and earnings growth rate of 14.2% for next year [8] UL Solutions Inc. (ULS) - UL Solutions provides safety science services across multiple segments, including Industrial, Consumer, and Software and Advisory [9] - The company has an expected revenue growth rate of 5.4% and earnings growth rate of 6.5% for next year [10] Omnicom Group Inc. (OMC) - Omnicom Group's diverse portfolio across traditional and digital marketing segments ensures revenue stability and adaptability [11] - The company has an expected revenue growth rate of 3.2% and earnings growth rate of 6.9% for next year [13] Veralto Corp. (VLTO) - Veralto is positioned for growth through U.S. infrastructure investments and rising semiconductor demand, with a strong focus on water quality and product quality segments [14][15] - The company has an expected revenue growth rate of 5.8% and earnings growth rate of 9.3% for next year [17]

Company Performance - Xylem Inc. (XYL) has shown a strong performance, with a year-to-date increase of 30% [1] - The company has maintained momentum, rising 15% over the past three months and 4.7% in the last month [1] - This growth is primarily attributed to higher margins and better-than-expected growth [1] Market Analysis - The market is beginning to recognize the potential of Xylem Inc. as it continues to perform well [1]

Core Viewpoint - The investment outlook for Xylem Inc. (XYL) remains positive due to strong secular tailwinds, successful integration of Evoqua, and a promising PFAS funding pipeline [1] Group 1: Investment Strategy - The investment approach focuses on long-term investments while also incorporating short-term shorts to identify alpha opportunities [1] - The analysis is based on a bottom-up approach, examining the fundamental strengths and weaknesses of individual companies [1] - The investment duration is medium to long-term, targeting companies with solid fundamentals, sustainable competitive advantages, and growth potential [1]

Core Viewpoint - The investment outlook for Xylem Inc. (XYL) remains positive due to strong secular tailwinds, successful integration of Evoqua, and a promising PFAS funding pipeline [1] Group 1: Investment Strategy - The investment approach focuses on long-term investments while also incorporating short-term shorts to identify alpha opportunities [1] - The strategy is based on bottom-up analysis, emphasizing the fundamental strengths and weaknesses of individual companies [1] - The investment duration is medium to long-term, targeting companies with solid fundamentals, sustainable competitive advantages, and growth potential [1]

Group 1: Water Stocks Overview - Water stocks are shares of companies involved in the supply, treatment, transport, storage, or management of water, including utilities, infrastructure firms, and technology providers [2] - Investors view water stocks as a way to gain exposure to a regulated sector with long-term demand driven by population growth, urbanization, and water scarcity [2] - The companies mentioned had the highest dollar trading volume among water stocks recently [2] Group 2: NuScale Power - NuScale Power Corporation develops and sells modular light water reactor nuclear power plants for various applications, including electrical generation and desalination [3] - The company offers the NuScale Power Module (NPM), which generates 77 megawatts of electricity (MWe), and designs for power plants that can house multiple NPMs [3] Group 3: Coca-Cola - The Coca-Cola Company manufactures and sells a variety of nonalcoholic beverages globally, including soft drinks, water, sports drinks, coffee, tea, and juices [4] Group 4: Ecolab - Ecolab Inc. provides water, hygiene, and infection prevention solutions, operating through three segments: Global Industrial, Global Institutional & Specialty, and Global Healthcare & Life Sciences [5] - The Global Industrial segment focuses on water treatment and cleaning solutions for various industries, including food and beverage processing and power generation [5] Group 5: Xylem - Xylem Inc. designs, manufactures, and services engineered products and solutions, operating through four segments: Water Infrastructure, Applied Water, Measurement & Control Solutions, and Integrated Solutions and Services [6] - The Water Infrastructure segment offers products such as pumps, filtration, disinfection equipment, and mobile dewatering services [6] Group 6: American Water Works - American Water Works Company, Inc. provides water and wastewater services to approximately 1,700 communities across 14 states, serving around 3.5 million active customers [8] - The company serves various customer segments, including residential, commercial, industrial, and public authorities [8]

Core Viewpoint - Xylem's shares have shown strong performance, with a 29.7% increase year-to-date, outperforming both the Zacks Business Services sector and the Zacks Waste Removal Services industry [1] Financial Performance - Xylem has consistently exceeded earnings expectations, reporting EPS of $1.37 against a consensus estimate of $1.24 in its latest earnings report [2] - For the current fiscal year, Xylem is projected to achieve earnings of $4.84 per share on revenues of $8.96 billion, reflecting a 13.35% increase in EPS and a 4.7% increase in revenues [3] - The next fiscal year forecasts earnings of $5.37 per share on revenues of $9.41 billion, indicating year-over-year changes of 11.12% in EPS and 5.01% in revenues [3] Valuation Metrics - Xylem's current valuation metrics show a Price-to-Earnings (P/E) ratio of 31.1X for the current fiscal year, slightly below the peer industry average of 31.8X [7] - On a trailing cash flow basis, the stock trades at 22.8X compared to the peer group's average of 15.4X, and it has a PEG ratio of 2.56, which does not place it among the top value stocks [7] Style Scores - Xylem has a Value Score of C, a Growth Score of B, and a Momentum Score of A, resulting in a combined VGM Score of B [6] Zacks Rank - Xylem holds a Zacks Rank of 2 (Buy), supported by a positive earnings estimate revision trend, indicating potential for further gains [8]