XYL
Xylem Inc.$129.40
Unclear
Target $119.69
Report: Mar 07, 2026Industrials • Industrial - Machinery • Mature CompounderSnapshot
Decision-first overview with recommendation, valuation anchor, and current setup.
Company Overview
Research Snapshot
Price History
Pelican View
Current$129.40-7.5%
Rec: UnclearConviction: Medium
Entry Target
$92.07
(29% below current)
Fair Value
$119.69
(8% below current)
Stop Loss
$100.47
(22% below current)
Position Size
Starter
Time Horizon
Long-Term
Key Metrics
Live Snapshot
Market Data
52 Week High$154.27
52 Week Low$100.47
Avg. 3 Month Volume1.83M
Efficiency
LTM Gross Margin38.5%
LTM EBITDA Margin19.8%
LTM EBIT Margin13.5%
LTM Operating Margin13.5%
LTM ROA5.6%
LTM ROE8.6%
LTM ROIC24.4%
LTM ROCE8.3%
Capital Structure
Market Cap (MM)$29.1B
Enterprise Value (MM)$29.5B
Shares Outstanding243.70M
Total Debt (MM)$1.94B
Cash & Equivalents (MM)$1.48B
LTM Net Debt (MM)$463.00M
LTM Net Debt/EBITDA0.3x
Growth
TTM Rev. Growth5.5%
Last 3-Yr Rev. CAGR17.8%
Last 3-Yr EBITDA CAGR35.1%
Last 3-Yr EPS CAGR25.8%
Valuation
Street Target Price$162.67
LTM EV/Revenue3.3x
LTM EV/Gross Profit8.5x
LTM EV/EBIT24.3x
LTM EV/EBITDA16.5x
LTM P/E30.4x
LTM EV/FCF31.8x
LTM P/FCF31.3x
LTM P/TB4.1x
LTM P/B2.5x
Dividend Yield1.3%
Payout Ratio40.8%
Executive SummarySituation: Current price is $129.4 versus fair value $119.69 (-7.5% expected return), and valuation confidence is stable. Debate: Bull case depends on Divestiture of the international metering business ($250M revenue, <10% margin) for $125M. Bear case centers on China market demand contraction and structural volume loss. Conclusion: Recommendation is Unclear; maintain no position until reliability and catalyst evidence improve.
Bull Case
Secular tailwinds from the U.S. Infrastructure Investment and Jobs Act and the CHIPS Act drive multi-year demand for water treatment; the Xylem Vue digital platform provides a high-margin, recurring revenue moat with 100% growth in 2025.
Bear Case
Spruce Point Capital alleges the Evoqua acquisition was a bailout for a struggling business with aggressive synergy targets; structural deceleration in revenue growth from 13.6% to 5.5% makes the 33.4x P/FCF multiple unsustainable.
Key Catalysts
Near-Term (0-6 months)Impact: High
Divestiture of the international metering business ($250M revenue, <10% margin) for $125M. This addresses market concerns regarding MCS segm...
Mid-Term (6-18 months)Impact: Moderate
Acceleration of AI-driven water-reuse projects in semiconductor and data center markets. This validates the variant perception that Xylem's...
Long-Term (18+ months)Impact: Moderate
Xylem is relevant now because the 8.04% price drop on February 10, 2026, has created a disconnect between record operational results and bea...
Primary Risks
Concern: High
China market demand contraction and structural volume loss. The mechanism is a permanent impairment of the Water Infrastructure segment's gr...
Concern: Medium
Tariff escalation and inflationary input cost pressure. This impairs the thesis by compressing gross margins, as pricing actions may not ful...
Concern: Medium
Stewardship is professional but lacks significant 'skin in the game,' as evidenced by the 0.27% insider ownership and $4.99 million in net s...
Recent Activity
2026-02-10SEC Filing (8-K)
-8.04%Xylem Inc. reports fourth-quarter and full-year 2025 results with record performance.
2025-07-31SEC Filing (8-K)
+10.74%Xylem Inc. reports strong second-quarter 2025 results with revenue growth and raises full-year guidance.
2025-02-04SEC Filing (8-K)
+5.24%Xylem Inc. reports Q4 and full-year 2024 results with record revenue and earnings growth
2024-10-31SEC Filing (8-K)
-6.48%Xylem Inc. reports third-quarter 2024 results and narrows full-year guidance.
2024-07-30SEC Filing (8-K)
-5.69%Xylem Inc. reports second-quarter 2024 results with significant growth and raises full-year guidance.
Valuation Table
9.8/10Decision Grade
Scenario Range
$101
Bear
$157
Bull
$129