XYLNYSE·Industrial - Machinery

Xylem Inc. XYL

Market cap $25.4BP/E 25.9× trailingGross margin 39.2%Reports Tue 3 Nov, before the open

$108.64

+0.79 (+0.73%)Wed close 16:00 ET

52-wk $105.29 – $154.27

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Orin's take

0.68conviction · moderate

Refreshed 18 Aug · take v7. A new filing or a print queues the next refresh.

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Xylem's margin expansion story remains intact—FY2025 operating margin reached 13.5% with EPS of $3.92 and Q2 2026 delivered record adjusted EPS with a substantial backlog increase—while the stock trades at a discount to peers on P/E (28.0x vs 29.7x median), P/S (3.0x vs 4.1x), and EV/EBITDA (15.7x vs 18.2x). However, revenue growth has decelerated sharply from 33.4% in 2023 to 5.5% in FY2025, Q2 2026 saw a lowered full-year organic revenue growth outlook due to electric metering project delays, and the company has announced $1.66B in acquisitions (Cornell/Roper Pump at $1.46B and WaterFleet at ~$200M) against $2.06B in existing debt, creating near-term leverage and integration risk.

With the stock below its 200-day MA ($126.89) and smart money momentum cooling from 0.040 to 0.010, the risk-reward is balanced but not compelling enough to add at current levels.

What could go wrong

M&A integration and leverage. $1.66B in announced acquisitions (Cornell/Roper Pump and WaterFleet) layered on $2.06B existing total debt as of FY2025 increases balance sheet risk and execution uncertainty.
Revenue growth deceleration. Revenue growth slowed from 33.4% (2023) to 16.3% (2024) to 5.5% (2025), and Q2 2026 organic growth outlook was lowered due to electric metering project delays.
Technical weakness. Stock at $117.47 trades below its 200-day MA of $126.89 with a negative MACD histogram (-0.435) and RSI of 44.9, suggesting persistent selling pressure.
Smart money cooling. Smart money score declined from 0.0403 (Q3 2025) to 0.0103 (Q2 2026), and fund count dropped from 62 to 59, indicating institutional conviction is fading.

What would change my mind

Organic revenue reacceleration. Q3 2026 results show electric metering project delays resolving and organic revenue growth reaccelerating above 5%bullish

Acquisition integration progress. Cornell/Roper Pump and WaterFleet acquisitions close with disclosed accretion targets and integration milestones on trackbullish

Further organic growth cuts. Additional reduction in full-year organic revenue growth guidance or backlog deterioration in Q3 2026bearish

Debt-funded deal strain. Leverage rises materially above 2x debt/EBITDA post-acquisition funding or credit rating downgradebearish

Where this comes from: derived_metrics FY2025 · derived_metrics FY2023–FY2025 · peer_relative · MarketBeat Q2 earnings call highlights 2026-07-28. Orin's read on XYL; not advice.

Twelve months actual closes to 2026-09-23 · actual filings

Sept 25Nov 25Jan 26Mar 26May 26Jul 26

50-day average 200-day average · volume below

On file

All XYL filings

Form	Filed	What it says	Read
8-K	18 Aug	Andrea van der Berg was appointed Executive Vice President and Chief Financial Officer effective September 1, 2026, succeeding William K.	read
8-K	13 Aug	Xylem Inc. increased its Board of Directors from 9 to 10 members, appointing D. Christian Koch effective August 13, 2026. Mr. Koch, who is Chairman, President, and CEO of Carlisle…	read
10-Q	28 Jul	Xylem Inc. reported Q2 2026 revenue of $2,336 million, a 1.5% increase year-over-year, driven by $30 million in organic growth and $29 million in favorable foreign currency…	read
8-K	28 Jul	Xylem Inc. reported its financial results for the quarter ended June 30, 2026, on July 28, 2026. The filing, triggering Item 2.02 and Item 9.01, includes a press release furnished…	read
8-K	29 May	Xylem Inc. completed a public offering on May 29, 2026, of $500 million in 5.200% Senior Notes due 2033 and $500 million in 5.450% Senior Blue Notes due 2036, totaling $1 billion.…	read
8-K	18 May	Xylem’s 2026 annual meeting on May 14 approved all four management proposals with 88.12% of shares represented.	read
13G	30 Apr	—	on file
13G	29 Apr	—	on file

Largest holders · 13F Q2 2026

Money flow

Filer	Position	Of fund
Vanguard Capital Management	$1.8B	0.0% of fund
Vanguard Portfolio Management	$1.5B	0.1% of fund
State Street	$1.4B	0.0% of fund
Geode Capital Management	$747.4M	0.0% of fund
Invesco	$603.1M	0.0% of fund
Bank of New York Mellon	$552.3M	0.1% of fund

94 filers · quarter ended Q2 2026 · positions, not flows

Insiders, last 24 months: 122 Form 4 filings, net $19.0M. Of the 50 on hand, 0 were open-market purchases and 1 a sale— the rest are grants, option exercises and tax withholding.

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Where it trades

vs its own 5y · Industrials

Metric	Now	Own median	Sector
P/E	25.9×	40.7×	44.5×
EV/EBITDA	14.6×	23.4×	—
P/S	2.78×	3.61×	—
P/B	2.5×	2.9×	—

Its P/E sits below all 5 of the last 5 years (−1.81σ from its own mean).

What the price assumes

12.2%

free-cash-flow growth every year for 10 years, discounted at 10%, is what today’s price implies — starting from $0.9B of trailing free cash flow. It is an assumption the market is making, not a forecast Orin is making.

What Wall Street published

40 firms · 2026-09-23

Consensus target

$152

$130 – $165 · +40% against today's price

How they rate it

19 buy or overweight
20 hold
1 underweight or sell

The analysts’ consensus and their own ratings, not Orin’s. A target is a twelve-month opinion published by the firm that wrote it.

Against the companies it is compared to

median P/E 27.5× of 13 peers

Company	Market cap	P/E	EV/EBITDA	Gross	Net	ROE
XYLXylem Inc.	$25B	25.9×	14.6×	39.2%	11.1%	9%
AOSA. O. Smith Corporation	$8B	16.1×	11.6×	38.6%	13.1%	27%
DOVDover Corporation	$25B	22.6×	15.0×	39.6%	13.5%	15%
EMREmerson Electric Co.	$87B	33.7×	19.1×	53.2%	13.8%	13%
ETNEaton Corporation plc	$170B	44.5×	29.6×	35.9%	12.8%	20%
FELEFranklin Electric Co., Inc.	$4B	27.5×	16.3×	35.5%	7.1%	12%
FLSFlowserve Corporation	$10B	26.8×	15.7×	35.1%	8.0%	17%
GGGGraco Inc.	$13B	24.3×	16.7×	52.6%	23.5%	20%
IEXIDEX Corporation	$17B	33.0×	20.1×	44.7%	14.5%	13%
IRIngersoll Rand Inc.	$30B	31.1×	17.0×	37.9%	12.1%	9%
ITTITT Inc.	$19B	41.4×	24.8×	34.6%	8.9%	10%
ITWIllinois Tool Works Inc.	$79B	24.7×	18.9×	44.2%	19.4%	102%
PHParker-Hannifin Corporation	$122B	33.6×	22.5×	37.7%	17.0%	25%
PNRPentair plc	$9B	13.8×	11.3×	41.3%	16.2%	17%

The median is of the 13 peers listed above and nothing else — check it against the column. This company trades 6.0% below it. The peer set is the vendor’s, so a company can appear here that a person would not have chosen.

What it has traded at

P/E by fiscal year

FY14 20.7×FY25 34.7×

What its sector has traded at

Industrials

FY14 173.5×FY26 32.7×

Two scales, drawn separately on purpose: a sector median and one company’s multiple are not the same number and putting them on one axis invites a comparison neither series supports.

Discounted cash flow

not recomputed since

Model	Fair value	Against	Computed
Standard DCF	$149	$108.02 · +38%	2026-06-10
Levered DCF	$116	$108.02 · +8%	2026-06-10

The vendor’s intrinsic-value models. Treat them as a low-growth anchor — for a fast grower the market routinely pays well above a DCF. These were computed against the price in the “against” column, not today’s.

Every estimate on one scale

price $108.64

52-week range$105 – $154

Analyst targets$130 – $165

Standard DCF$149 as of 2026-06-10, when it was $108.02

Levered DCF$116 as of 2026-06-10, when it was $108.02

At own 5y-median P/E (41×)$171

At 5y P/E range (32–56×)$133 – $236

At sector P/E (45×)$187

The vertical rule is the current price. Ranges and point estimates are the backend’s, published as they were calculated; an arrow means the estimate sits beyond this scale, and its number is on the right.