Quality Investor

Xylem Inc.

Rank #354Capital Return

XYL · NYSE · Industrials

Xylem Inc. (XYL) — Rank #354 by gross profitability (GP/assets 0.20) · ROE 9.2% · Piotroski F-Score 6 / 9.

As-of 2026-09-15 · CIK 0001524472 · all metrics point-in-time as of the filing date.

About

Xylem Inc., together with its subsidiaries, engages in the design, manufacture, and servicing of engineered products and solutions for utility, industrial, and residential and commercial building services settings worldwide.

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It operates through Water Infrastructure; Applied Water; Measurement and Control Solutions; and Water Solutions and Services segments. The company offers water, wastewater, and storm water pumps and controls and systems; filtration, disinfection, and biological treatment equipment under the Flygt, Ionpure, Leopold, Neptune Benson, Sanitare, Wallace & Tiernan, and Wedeco brands; and pumps, valves, heat exchangers, controls, and dispensing equipment used for water and focuses on the residential, commercial and industrial markets under the Rule, Bell & Gossett, Flojet, Goulds Water Technology, Jabsco, and Lowara brands. It also provides smart meters, network communication devices, data analytics, test instruments, controls, sensor devices, software and managed services, critical infrastructure services, cloud-based analytics, and remote monitoring and data management under the Ebro, Sensus, Sentec, Smith Blair, WTW, YSI, and Xylem Vue brands. In addition, the company offers preventative maintenance services, rapid response mobile services, digitally enabled/outsourced solutions, process and wastewater treatment systems, environmental remediation, odor and corrosion control, filtration, reverse osmosis, continuous deionization, and mobile dewatering equipment and rental services; and municipal services comprising odor and corrosion control services, as well as condition assessment and asset management, and pressure monitoring solutions under the Grindex, Mar Cor, and Godwin brands. Xylem Inc. was formerly known as ITT WCO, Inc. and changed its name to Xylem Inc. in July 2011.

The company was incorporated in 2011 and is headquartered in Washington, District Of Columbia.

Industry
Specialty Industrial Machinery
Sector
Industrials
State
IN
Filer Category
Large accelerated filer
Fiscal Year End
December 31
Website
xylem.com

Price History

XYL-17.1% · -3.7% CAGRSPY+80.5% · +12.5% CAGR

Company Snapshot

P/E and reverse DCF are the primary valuation lenses at this stage.

Market Cap

$25.06B

P/E (annual)

27.4

P/S (annual)

2.8

P/B

2.4

P/OCF (annual)

20.2

Shareholder Yield

1.4%

Employees

22,000

Industry

Specialty Industrial Machinery

Exchange

NYSE

Signal Flags

2 green
Operating leverage expandingOperating income growing faster than revenue
Sequential beat (rev + EPS)Both revenue and EPS exceeded prior quarter — 2-quarter streak

Quality Profile

Profitability

1/1 pass
GP / assets
0.20
Return on equity
9.2%
Gross margin trend
PASS

Safety

1/1 pass
Balance-sheet safety
PASS
Debt / equity
0.64
Current ratio
1.61×
Net cash
-$1.65B

Cash Flow

2/3 pass
Positive FCF
PASS
Cash-backed earnings
WARN
Accruals healthy
PASS
SBC / revenue
0.6%

Growth

2/2 pass
Revenue growth
5.5%
Piotroski F-Score
6 / 9
Share dilution
0.2%

Terry Smith quality gate

Passes 1/5 Terry Smith thresholds

1 of 5 threshold not computable from filed data.

What Growth Is Priced In

Implied revenue growth (10Y)

12.7%

incredible deal

The annual FCF growth rate today's price requires over a 10-year horizon (discount rate 10%, terminal growth 2.5%).

Dilution drag: 0.2% — per-share value needs a total required return of 12.8% once share-count change is priced in.

vs. own 6-year median revenue growth: 6.4%

priced above its own history

Cost-of-equity sensitivity (implied growth at different discount rates)

r = 8%

8.1%

r = 10% (base)

12.7%

r = 12%

16.6%

Net debt / market cap: 6.3%

Base FCF: $910M3Y mean FCF: $806M

Valuation History

Current multiple vs historical range at each filing date. Band spans 25th-75th percentile.

P / E

Price / diluted EPS

32.7xCheap
24.7xmed 39.8x71.1x

P / S

Price / revenue per share

3.5xFair
2.6xmed 3.4x3.7x

P / B

Price / book value per share

2.7xCheap
2.7xmed 5.0x6.1x

P / GP

Price / gross profit per share

9.0xFair
6.7xmed 8.9x10.1x

P / FCF

Price / free cash flow per share

34.4xFair
22.9xmed 35.2x50.0x

FCF yield, shareholder yield, and buyback activity are the primary reads at this stage.

Profitability

Gross profitability (GP / assets)

0.20

Primary signal (Novy-Marx).

20th pctl of 36 SIC 35 peers

Return on equity

9.2%

Gross margin

38.5%

40th pctl of 36 SIC 35 peers

Revenue growth (YoY)

5.5%

Gross margin improving

Margin trend vs prior year.

PASS

Operating Leverage

2022202320242025
Revenue vs COGS
Revenue vs OpEx
Op. Income vs Revenue

Growth

Revenue CAGR (3Y)

17.8%

Revenue CAGR (5Y)

13.1%

Earnings CAGR (3Y)

39.2%

FCF CAGR (3Y)

32.9%

Anti-fragile safety

Balance-sheet safety

Composite anti-fragile check.

PASS

Debt / equity

0.64

80th pctl of 36 SIC 35 peers (best = lowest)

Current ratio

1.61×

23rd pctl of 36 SIC 35 peers

Quick ratio

1.16×

Net cash

-$1.65B

Cash & equivalents minus total debt.

Cash-flow health

Free cash flow

$910.00M

Operating cash flow minus capex.

Positive free cash flow

PASS

FCF / net income

-0.05

Cash-backing of earnings.

FCF/NI divergence

Unfavorable divergence (yellow flag).

WARN

Accruals healthy

Cash-backed earnings.

PASS

SBC / revenue

0.6%

Stock-based comp intensity.

Dividend safety

Composite score

3.8 / 5

Good
Payout ratio
40.9%4/5 Strong
FCF coverage
2.33×4/5 Strong
Dividend growth streak
10 yr5/5 Strong
Balance-sheet health
D/E 0.64 · IC N/A2/5 Fair

Piotroski F-Score

F-Score

6 / 9

Fundamental-strength score (0-9).

Lifecycle Phase History

20202025
Decline
Capital Return
Hypergrowth