Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of water treatment company Xylem (NYSE: XYL ) fell 12% today after reporting earnings.
So what: Revenue fell 1% in the second quarter to $960 million, which was short of a $967.9 million estimate from analysts. Net income fell nearly 50% to $46 million, or $0.25 per share. Adjusted earnings of $0.36 fell short of estimates by $0.08.
Now what: To make matters worse, management reduced full-year outlook to $1.40-$1.50 per share, which is $0.39 lower than previous estimates. Even at the top end of estimates the stock trades at 17 times forward earnings, which isn't a steal given the decline in revenue. I'd stay away from this stock today and wait for improved earnings before jumping in again.
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