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What this page is: Delvantic's full research page for Xylem Inc. (XYL) — AI-driven forensic equity research: mechanical valuation models (DCF, EPV, anchored-PE, scenario) plus three independent AI lenses (Quality / Value / Sentiment). Everything below is rendered server-side; you are not missing content that requires JavaScript. All scores are predictions and research opinions, not financial advice.
Our current read (analysis of 2026-10-08): Designation Low · Gem Score -29 (−100…+100 Quality+Value blend) · Quality 30 · Value -69 · Sentiment -4 (timing only, not weighted) · Composite fair value $58.90 vs $110.11 at analysis
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profile-header/price-overview— company profile, live quote, market capextended-analysis— the core: three AI lens reads with findings, scores, and the analyst memofuture-predictions— our forward price-band predictionsmarket-narrative/ai-findings/gpt-critique— narrative context, cross-model findings, and an adversarial critique of our own analysis (near the end of the document)- Members-only sections (render as login gates for anonymous readers):
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Xylem Inc.
XYL NYSEXylem Inc. is a global water technology company that designs, manufactures, and services engineered solutions for the transport, treatment, testing, and efficient use of water. Its current business spans water infrastructure, applied water, measurement and control solutions, and integrated services that support clean water delivery, wastewater management, stormwater handling, and water reuse. Xylem serves municipalities, utilities, industrial operators, commercial facilities, and residential markets with products such as pumps, valves, filtration and disinfection systems, sensors, analytical instruments, smart metering technologies, and digital monitoring tools. The company also provides service and maintenance capabilities that help customers manage water systems more efficiently across utility, industrial, and building applications. Headquartered in Washington, D.C., and founded in 2011, Xylem Inc. plays a central role in modern water infrastructure by helping customers improve reliability, resource management, and water quality across the full water cycle.
Price Overview
Price History (1 Year)
Revenue & Net Income Trend
| Period | Revenue | Net Income | Net Margin | YoY/QoQ |
|---|
Key Metrics
EPS (Diluted): 3.92
Total Equity: $11.75B
Shares: 243,994,000
Total Debt: $2.07B
Cash: $1.48B
EBITDA: $1.80B
Total Debt: $2.07B
Cash: $1.48B
Revenue: $9.04B
Revenue: $9.04B
Revenue: $9.04B
Total Equity: $11.75B
Tax Rate: 19.6%
Equity: $11.75B
Total Debt: $2.07B
Cash: $1.48B
Current Liabilities: $2.86B
Long-Term Debt: $1.50B
Total Debt: $2.07B
Total Equity: $11.75B
Shares: 243,994,000
Shares: 243,994,000
CapEx: -$331.00M
Shares: 243,994,000
Stock Price: $110.11
Net Income: $957.00M
Industry Benchmarks
Income Statement (Annual)
Last updated: Sep 1, 2026 4:45am (37d ago)| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue | $5.2B | $5.5B | $7.4B | $8.6B | $9.0B |
| Cost of Revenue | $3.2B | $3.4B | $4.6B | $5.4B | $5.6B |
| Gross Profit | $2.0B | $2.1B | $2.7B | $3.2B | $3.5B |
| Operating Expenses | $1.4B | $1.5B | $2.1B | $2.2B | $2.3B |
| Operating Income | $585.0M | $622.0M | $652.0M | $1.0B | $1.2B |
| Net Income | $427.0M | $355.0M | $609.0M | $890.0M | $957.0M |
| EBITDA | $830.0M | $858.0M | $1.1B | $1.6B | $1.8B |
| EPS | $2.37 | $1.97 | $2.81 | $3.67 | $3.93 |
| EPS (Diluted) | $2.35 | $1.96 | $2.79 | $3.65 | $3.92 |
Balance Sheet (Annual)
Last updated: Sep 1, 2026 4:30am (37d ago)| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Cash & Equivalents | $1.3B | $944.0M | $1.0B | $1.1B | $1.5B |
| Total Current Assets | $3.2B | $3.0B | $3.9B | $4.1B | $4.6B |
| Total Assets | $8.3B | $8.0B | $16.1B | $16.5B | $17.6B |
| Current Liabilities | $1.4B | $1.6B | $2.2B | $2.3B | $2.9B |
| Long-Term Debt | $2.4B | $1.9B | $2.3B | $2.1B | $1.5B |
| Total Liabilities | $5.1B | $4.4B | $5.9B | $5.6B | $5.9B |
| Total Equity | $3.2B | $3.5B | $10.2B | $10.9B | $11.7B |
| Retained Earnings | $2.2B | $2.3B | $2.6B | $3.1B | $3.7B |
Cash Flow (Annual)
Last updated: Sep 1, 2026 5:08am (37d ago)| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Operating Cash Flow | $538.0M | $596.0M | $837.0M | $1.3B | $1.2B |
| Capital Expenditure | -$208.0M | -$208.0M | -$271.0M | -$321.0M | -$331.0M |
| Free Cash Flow | $330.0M | $388.0M | $566.0M | $942.0M | $910.0M |
| Acquisitions (net) | $0 | $0 | -$476.0M | -$193.0M | -$163.0M |
| Net Debt Issued / (Repaid) | -$600.0M | -$527.0M | $118.0M | -$16.0M | -$82.0M |
| Dividends Paid | -$203.0M | -$217.0M | -$299.0M | -$350.0M | -$391.0M |
| Stock Buybacks | -$68.0M | -$52.0M | -$25.0M | -$20.0M | -$15.0M |
| Net Change in Cash | -$526.0M | -$405.0M | $75.0M | $102.0M | $358.0M |
Growth Trends (YoY %)
Last updated: Sep 1, 2026 4:45am (37d ago)| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue Growth | +6.3% | +33.4% | +16.3% | +5.5% |
| Gross Profit Growth | +5.5% | +30.4% | +18.2% | +8.2% |
| Operating Income Growth | +6.3% | +4.8% | +54.8% | +21.2% |
| Net Income Growth | -16.9% | +71.5% | +46.1% | +7.5% |
| EBITDA Growth | +3.4% | +26.8% | +44.4% | +14.4% |
Dividend History (Last 20)
Last updated: Sep 1, 2026 4:30am (37d ago)| Date | Dividend | Declaration | Record | Payment |
|---|---|---|---|---|
| 2026-08-27 | $0.43 | — | — | — |
| 2026-05-28 | $0.43 | — | — | — |
| 2026-02-24 | $0.43 | — | — | — |
| 2025-11-25 | $0.40 | — | — | — |
| 2025-08-28 | $0.40 | — | — | — |
| 2025-05-29 | $0.40 | — | — | — |
| 2025-02-18 | $0.40 | — | — | — |
| 2024-11-26 | $0.36 | — | — | — |
| 2024-08-29 | $0.36 | — | — | — |
| 2024-05-30 | $0.36 | — | — | — |
| 2024-02-20 | $0.36 | — | — | — |
| 2023-11-20 | $0.33 | — | — | — |
| 2023-08-30 | $0.33 | — | — | — |
| 2023-05-26 | $0.33 | — | — | — |
| 2023-02-21 | $0.33 | — | — | — |
| 2022-11-21 | $0.30 | — | — | — |
| 2022-08-31 | $0.30 | — | — | — |
| 2022-05-25 | $0.30 | — | — | — |
| 2022-02-16 | $0.30 | — | — | — |
| 2021-11-22 | $0.28 | — | — | — |
Deep Analysis
Risk : Reward — upside vs downside from this company's own quarters
Computed 2026-10-05 02:01A +1σ run of quarters pays -30%; a −1σ run costs 70%. Ratio -0.4:1 (μ 8.0%, σ 11.6% , 16 pairs).
Older method (repeat-worst-quarter): -0.7 : 1
| Case | Growth | Margin | Fair value | vs price ($110.11) |
|---|---|---|---|---|
| Bull — recovery | +3% | 17.3% | $62.74 | -43% |
| Base — stabilizes | +2% | 15.0% | $53.44 | -51% |
| Bear — keeps slipping | +1% | 12.8% | $44.69 | -59% |
| Stress — last quarter repeats | +3% | 11.5% | $43.01 | -61% |
| Upside — a +1σ run of quarters (v2) | +20% | 12.3% | $76.91 | -30% |
| Stress — a −1σ run of quarters (v2) | -4% | 10.9% | $33.29 | -70% |
Narrative Economics
market-narrative step).
Growth Outlook
Analyzed 2026-09-01 05:17The question every valuation on this page silently assumes: is this company likely to grow? Judged forward — the business, its category, the world — against what's already printed.
Claude Reading
Independent read on the numbers first: Xylem is compounding revenue at ~10% (2021 $5.2B → 2025 $9.0B, though a chunk of that is the Evoqua deal, not organic), and 2026 quarters ($2.13B Q1, $2.34B Q2) show roughly 3-5% YoY — decelerating hard from the M&A-boosted comps. Net margin has drifted up from ~7% in 2022-23 to ~10.6% TTM, and FCF conversion is genuine ($910M FCF on $957M NI in 2025). Balance sheet is pristine: $2.07B debt vs $1.48B cash and $11.75B equity, D/E 0.18. But ROE is 8.1% and ROIC is 8.0% — that is *not* a compounder's return profile; it's a decent industrial diluted by the Evoqua goodwill on the equity base. At $110 and a 28x trailing P/E on a business earning sub-10% on invested capital growing mid-single-digits organically, you are paying a quality-compounder multiple for a mid-quality industrial.
Where I agree with the prior stack: the synthesis verdict of overvalued and the narrative layer's $56 DCF anchor are directionally right. A business earning ~$1B in FCF, growing FCF maybe 6-8% sustainably, deserves something like 20-22x FCF = ~$20-22B EV, or roughly $75-85/share equity — not $25.7B market cap plus modest net debt. The "platform monopoly / water digitalization" narrative is exactly the kind of story that gets told about pump-and-valve businesses to justify SaaS multiples; the 38.5% gross margin flatly contradicts a software-mix-shift story of any material scale. If digital were really 20%+ of revenue at software economics, gross margin would be north of 45% and climbing visibly. It isn't.
Where I'd push back on the models: the synthesis fair value of $55.68 is too aggressive on the downside. Xylem is not a melting ice cube — regulated water capex (lead pipe replacement, PFAS remediation, IIJA disbursements still ramping) is a real, multi-year tailwind, and the company has pricing power on the installed base. The "sector in contraction" flag looks wrong for water infra specifically; that's a read on broader industrials. Also, the pre-flight thesis assumes 12-13% operating margins as the market's bogey, and Xylem is already at 13.5% operating margin on the annual — so margin expansion isn't purely aspirational, it's partially delivered. A fair value in the $70-80 range (roughly 22-25x normalized FCF, giving credit for the tailwind but not the SaaS fantasy) is more defensible than $56. That still leaves the stock ~30-40% overvalued, not 50%.
Contrarian case worth naming: if PFAS regulation forces a wave of municipal treatment upgrades in 2026-2028, Xylem's Evoqua unit is uniquely positioned and could see step-function revenue, not compound growth. Insider activity is all awards (compensation), not open-market buying — the "net insider buying" tag is misleading; awards are not a signal. The Q2 2026 margin of 11.3% is the best non-seasonal quarter in the dataset, which suggests operational execution is on track even as top-line decelerates. And the debt profile means they can lever up for another Evoqua-scale deal without stress, giving embedded M&A optionality the DCF ignores. None of this gets you to $110, but it gets you closer to $80 than $55, and it means shorting here is dangerous. I dissent partially with the synthesis: agree on direction (overvalued), disagree on magnitude (fair value $70-80, not $55).
GPT Reading
Xylem looks like a good business priced like a great one. The operating record is clearly better than the crude “mature industrial” label implies: revenue has risen from $5.20B in 2021 to $9.04B in 2025, operating income from $585M to $1.22B, and net income from $427M to $957M. Gross margin improved from 38.1% in 2021 to 38.5% in 2025, while operating margin expanded from 11.3% to 13.5%, so this is not just a revenue aggregation story. The latest four quarters annualize to roughly $9.41B of revenue and $1.02B of net income, which suggests continued progress rather than deterioration. Balance sheet risk is low: $2.07B of debt against $1.48B of cash and $11.75B of equity is modest, and $910M of free cash flow on $957M of net income says earnings quality is real. If I only looked at the business, I’d call it one of the cleaner industrial compounders in large-cap machinery.
But the stock price asks you to pay up as if the next leg of margin and growth is highly visible, and the data here do not fully support that confidence. At $110.11 and a $25.7B market cap, investors are paying about 2.8x 2025 sales, 28x earnings, and 15.2x EV/EBITDA for a company growing revenue 5-6% lately and earnings 7-8% lately. That multiple could be fine for a business with clearly accelerating recurring revenue mix or ROIC well into the teens; instead, ROIC is 8.0% and ROE 8.2%. Those are respectable, not premium. Quarterly progression also says this is still an industrial with seasonality and some lumpiness, not a software-like compounding machine: net margin was 8.2% in 2025 Q1, 9.8% in Q2, 10.0% in Q3, then 14.0% in Q4; 2026 is tracking similarly at 9.1% then 11.3%. That pattern doesn’t disqualify the story, but it does argue against a valuation that assumes smooth, recurring, high-visibility growth.
What stands out most is the gap between business quality and valuation quality. Free cash flow of $910M against a $25.7B equity value is only about a 3.5% FCF yield. Even giving credit for the secular water tailwind, that is thin compensation for a company whose recent growth has already cooled from the multiyear CAGR figures to mid-single digits on revenue. If the latest four-quarter net income base of about $1.02B is the new run rate, the trailing P/E is closer to 25x than the stated 28x, but that still feels full for a 10-11% net margin industrial earning single-digit returns on capital. I don’t buy the harsher machine output implying something like $55-60 fair value; the balance sheet, cash conversion, and margin stability are too good for that. But I also don’t see a persuasive path from these numbers to justify $110 unless revenue can sustainably re-accelerate above 8% while operating margin pushes toward 15% and stays there.
The best pushback to my view is straightforward: the market may be correctly looking through near-term deceleration because Xylem has already proven an ability to scale earnings much faster than revenue. From 2023 to 2025, revenue grew 22.8% while operating income grew 87% and net income 57%, which is exactly the kind of operating leverage that deserves a premium. Recent quarters are not weak: 2026 Q2 revenue of $2.34B was up from $2.30B a year earlier, and net income of $263M was up from $226M, lifting margin from 9.8% to 11.3%. Net debt is negligible, the current ratio is 1.63, and the dividend payout ratio at 41% is conservative enough to support ongoing returns while still funding growth. If management can keep converting a municipal/infrastructure franchise into a higher-service, higher-digital mix, a 25-28x multiple may simply reflect durability rather than exuberance. I weigh that argument less heavily because the hard profitability evidence still tops out at mid-teens operating margin and high-single-digit returns on capital; that is good execution, not yet proof of a structurally superior economics profile.
What would change my mind is not a macro water thesis but a few very specific numbers. I would get more constructive if the next 2-3 quarters showed revenue growth re-accelerating into the high single digits with net margin holding above 11% outside the seasonally strong Q4, or if full-year free cash flow moved clearly above $1.1B without leverage rising. Sustained ROIC above 10% would matter more to me than another narrative about digitalization. Conversely, if revenue slips back toward 3-4% growth or quarterly net margin falls back into the 8-9% range, the current multiple becomes hard to defend and I’d expect the stock to de-rate toward a more normal industrial valuation in the $85-95 range.
Grok Reading
Xylem’s numbers tell a story of a solid industrial that has been financially engineered and narratively re-rated into something it has not yet become. Revenue climbed from $5.20B in 2021 to $9.04B in 2025, with net income more than doubling to $957M and free cash flow reaching $910M on only $331M of capex—genuinely high-quality cash conversion. But the step-function from $5.52B to $7.36B to $8.56B is acquisition-heavy (Evoqua-scale), not pure organic compounding, and the most recent year-over-year revenue growth has slowed to 5.5% with a decelerating quarterly trend. Operating margin sits at 13.5% and net margin at 10.6%; ROIC is 8.0% and ROE 8.2%—respectable for a pump-and-treatment conglomerate, inadequate for a 28.1x trailing P/E, 3.0x sales, and 15.2x EV/EBITDA. At $110.11 and a $25.7B enterprise, the market is paying roughly 28x earnings and a 3.5% FCF yield for mid-single-digit top-line growth and high-single-digit returns on capital. Balance sheet is clean ($2.07B debt against $1.48B cash and $11.75B equity, D/E 0.18), which removes distress risk but does not create growth. Insider activity is almost entirely routine awards, not conviction buying. The quantitative models’ ~$56–60 fair-value anchors are directionally right: fundamentals alone do not support $110.
The market thesis—and the narrative layer’s “platform-monopoly” framing—prices in three things that are only partially visible in the data: mandated multi-decade water infrastructure spend, mix shift toward higher-margin digital/services that pushes operating margins toward 12–13%+ on a sustained basis, and multiple expansion as the story “software-izes.” Trailing gross margin of 38.5% and the path from 2023’s $652M operating income to 2025’s $1.22B show real operating leverage post-integration, and earnings and FCF CAGRs of 25%+ over the last half-decade are hard to dismiss as pure accounting. A smart opponent would also note that municipal and utility capex is sticky, climate-driven water stress is not cyclical in the usual industrial sense, and a 1.5% dividend with a 41% payout leaves room to grow the return of capital without starving reinvestment. That case is coherent—it just requires the company to deliver several more years of 7–8% organic growth plus 100–200 bps of margin expansion that the latest quarters (5.5% revenue growth, still-lumpy sequential margins) have not yet confirmed at scale.
I weigh the skeptic side more heavily because the deceleration is already in the print, ROIC remains industrial not software, and the 97% premium the narrative layer itself assigns over DCF is almost pure belief. Sector headwinds and “in-line with sector” secondary signals do not support a scarcity multiple. The stock is priced for the best version of the water-digitalization story; the financials still read like a well-run specialty machinery consolidator.
What would flip me: two consecutive quarters of organic revenue growth re-accelerating through 8% with operating margin sustained above 14%, or clear disclosure that software/recurring digital is approaching 25%+ of revenue with SaaS-like retention—anything that makes the 28x multiple earn its keep rather than hope for it. A sharp multiple compression toward 18–20x on a growth miss would also reset the setup constructively from a lower base.
Big-3 Panel — where each AI stands
Advanced Analysis Forensic deep-dive · separate lenses
Revenue has scaled from $5.20B (2021) to $9.04B (2025), a roughly 75% jump, with gross margin steady at 37-38% and operating margin expanding from 11.3% to 13.5%. Net income nearly doubled from $427M to $957M and FCF ran $910M in 2025 on $942M the prior year - a strong OCF/NI of 1.41x, accruals of -1.9% of assets, Beneish M of -2.51 and Altman Z of 3.78 all say the reported earnings are real and the balance sheet sits in the safe zone. Liquid cash of $1.48B against modest net debt of $588M is a constraint but not a threat given self-funding FCF.
Verify before trusting this (6)
- Organic vs acquired revenue growth 2023-2025 to isolate Evoqua contribution from underlying demand
- Gross debt maturity ladder and covenants behind the $588M net debt position
- Goodwill and intangibles as % of assets post-Evoqua and any impairment testing sensitivities
- Segment-level margins to see whether the 13.5% op margin is broad-based or concentrated
- Any authorized buyback program and pace of execution to gauge dilution offset going forward
- Customer/end-market concentration (utility vs industrial vs residential) and backlog trend
Price is $110.11 against an e2e composite fair value of $60 and a signal-adjusted FV of $55.68 - roughly a 45-50% premium to deserved value. The DCF ($44) and EPV floor ($31) both sit well below price; only the anchored-PE method ($120) supports today's quote, and that method is essentially capitalizing the current multiple rather than testing whether the multiple is deserved. Stripping that outlier, the cash-flow-based work says the business is worth $40-60 per share. Company quality is Solid but not Strong - ~8%/yr share issuance from Evoqua-style deals is a real drag on per-share compounding, which argues for a lower deserved multiple, not a higher one. To justify $110 the market must underwrite sustained mid-to-high single-digit organic growth plus continued margin expansion plus disciplined M&A - a stack of 'and's rather than 'or's. That is the definition of priced for perfection on a slow-cycle municipal capex business.
Verify before trusting this (5)
- Organic (ex-Evoqua) revenue growth and whether it is sustaining mid-single-digits or fading toward low-single-digits
- Segment margin trajectory - is Measurement and Control Solutions actually inflecting or normalizing
- Guided share count and any buyback authorization to offset dilution
- Municipal order book and backlog conversion cadence - lumpy or accelerating
- Free cash flow conversion vs GAAP EPS over the next 2-4 quarters
The macro tape is mildly supportive: risk-on at +26, VIX under 15, and beta near 1.0 means XYL neither gets amplified lift nor macro punishment. Higher rates (10y 4.73%) and a 25.8 market PE are a background headwind for a name trading around 24x forward on a story-premium multiple, but nothing acute is pressing on the shares this week. The news flow (Europe pump market growth forecast) is benign and quietly reinforces the picks-and-shovels water thesis without being a real catalyst. The narrative doing the heavy lifting is a platform-monopoly water-infrastructure story with strong intensity but only moderate durability and low cult - meaning the belief is real but not fanatical, so it depends on continued validation from municipal capex headlines, margin execution, and ESG fund flows. Momentum has decelerated (recent 5.5% vs 10.8% long-term), which is the first hint the story is losing marginal buyers even as the tape stays friendly. Net: sentiment is roughly balanced - the tape and story lean tailwind, but a maturing narrative on a premium multiple caps upside pressure.
Verify before trusting this (4)
- Municipal water capex data points and any US federal infrastructure funding updates
- Analyst target revisions and consensus split - watch for downgrades citing valuation
- Q3 print: margin trajectory on service/software mix, the linchpin of the premium multiple
- Whether ESG/thematic fund flows into water names hold up if rates stay elevated
Water is the most policy-insulated corner of a contracting industrials complex: replacement of aging pipe, effluent/PFAS compliance and metering mandates are legislated obligations, so the demand floor is high even as machinery capex broadly weakens. The offset is financing — a 4.73% long rate and a flat curve raise the cost of municipal bond issuance, stretching award-to-revenue timelines and making project timing lumpier than the underlying need implies. Tariff and component-cost noise is a margin variable Xylem has so far absorbed through pricing and simplification. Net: the world supports a steady mid-single-digit water demand backdrop with earnings upside from internal cost work — not a step-change growth regime.
When we made this prediction on Sep 1, 2026, XYL was $107.20. We expect it to be $96.50 by Mar 2027, and we consider it great value under $72.00. This is an early model (v0.6.0) — the direction is more reliable than the exact price. Made Sep 1, 2026.
Blue is our prediction, starting the day we made it. Grey is a slower route to the same place — the same destination, taking longer. Black is the actual price, so you can see how we are doing.
Post-Report Due Diligence NOTES
Evidence for a closer look, not a verdict — no score or designation on this page has been changed by it. Items marked material are ones where a conclusion above moves to the other side of the price.
trailing_eps
flips up 25%
adjusted_pe
flips up 25%