Why Xylem Stock Tumbled on Thursday

On the back of Xylem's (NYSE:XYL) latest quarterly earnings report, investors eagerly traded out of the stock on the second-to-last trading day of the week. This news-fueled decline left the shares with a more than 6% price haircut at market close, notably worse than the almost 2% decrease of the S&P 500 (SNPINDEX:$SPX) index.

Modest rises in key fundamentals

Xylem's third quarter saw the water technology specialist earn $2.1 billion in revenue, which was 1% higher on a year-over-year basis. Non-GAAP (generally accepted accounting principles) adjusted net income also inched up across that stretch, coming in at just under $244 million ($1.11 per share) from the year-ago profit of $242 million.

On average, analysts tracking Xylem's fortunes were expecting a slightly higher top line of $2.17 billion, while the company met their collective estimate of $1.11 per share for adjusted net income.

Describing the company's revenue growth as "moderated," CEO Matthew Pine attributed it to project timing, for the most part.

Bottom-line guidance narrowed

Xylem also updated its guidance for the entirety of 2024. The company maintains that it will post revenue of $8.5 billion, which, if achieved, would represent a year-over-year improvement of roughly 15%. On a per-share basis, adjusted net income should be $4.22 to $4.24; previously, management was modeling $4.18 to $4.28.

The upper ends of both ranges fall short of the consensus analyst projections of nearly $8.6 billion for revenue, and adjusted net income of $4.26 per share.

While Xylem's third quarter certainly wasn't awful, it didn't feature any news that could be considered inspiring. Meanwhile, those twin guidance misses didn't do the company any favors either.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.