2Q2026 Earnings Preview - Lukewarm, but Heating Up

Research evidence excerpt

2Q2026 Earnings Preview - Lukewarm, but Heating Up

Deutsche Bank

Research

North America Industry Date

United States 30 June 2026

Water Tech.

Industrials Forecast Change

Multi - Industry & Electrical

Equipment

2Q26 Earnings Preview - Lukewarm, but

Heating Up

Andrew Krill, CFA

DB's View: The level of investor interest in the Water Tech. names had been

Research Analyst

"lukewarm" for several quarters as most did not nicely fit into several of the +1-212-250-2997

industrials macro investing themes including a short-cycle rebound or data

center exposure. That said, we sense some renewed interest in the group as Nicole DeBlase

several names seem poised for stronger growth and absolute/relative valuations

+1-212-250-5916

remain near historical lows. Based on our company end of quarter check-ins and

intra-quarter updates/reads, we believe that 2Q26 played out mostly as expected,

Key Changes

and that companies should broadly be able to put up modest beats. It also

Company Target Price Rating

appears the direct/indirect Middle East fallout remains manageable. We

127.00 to

anticipate 4/6 companies will raise annual EPS guidance (Watts, Zurn Elkay, BMI.N -

143.00

Xylem, Veralto), with two reiterating (Pentair, Badger Meter). We also believe that

PNR.N 106.00 to 99.00 -

the expectations bar remains relatively low for the Water names. Our favorite

358.00 to

names into the quarter are Xylem and Veralto. WTS.N -

372.00

155.00 to

Quarterly results should generally be in line to modestly ahead of expectations; XYL.N -

149.00

we expect five beats and one in line result. Of the six Water Tech. names in our

Source: Deutsche Bank

coverage, we expect five beats (largest beat to smallest: Badger Meter, Xylem,

Pentair, Watts, Zurn Elkay) and one in line result (Veralto). We believe that