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Xylem Inc (XYL)
NYSE:XYL
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Xylem (XYL) AI Stock Analysis

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XYL

Xylem

(NYSE:XYL)

Rating:78Outperform
Price Target:
$161.00
▲(11.33% Upside)
Xylem's overall stock score is driven by its strong financial performance and positive earnings call, which highlight robust revenue growth and improved profitability. Technical analysis supports a bullish outlook, although the high valuation presents a risk. The decline in free cash flow and external economic challenges are areas to monitor.
Positive Factors
Management Strategy
Management's simplification plan is moving forward with the desired impact.
Market Position
XYL is an industry leading water technology pure play and is considered an attractive core long-term holding for industrial and sustainability-focused investors.
Valuation
XYL is currently trading at a discount to historical averages, making current levels an attractive entry point.
Negative Factors
Future Challenges
Order comps will get more challenging into 2H.
Growth Potential
Obvious upside will likely be harder to come by.

Xylem (XYL) vs. SPDR S&P 500 ETF (SPY)

Xylem Business Overview & Revenue Model

Company DescriptionXylem Inc. (NYSE: XYL) is a leading global water technology company dedicated to solving the world's water challenges. The company operates in the water and wastewater sectors, providing innovative solutions for water transport, treatment, and testing. Xylem's core products and services include pumps, valves, filtration systems, and monitoring equipment, as well as comprehensive services for water management and infrastructure. With a focus on sustainability and efficiency, Xylem aims to improve water quality and accessibility worldwide.
How the Company Makes MoneyXylem generates revenue through a diverse range of products and services within the water technology sector. Its primary revenue streams include the sale of equipment such as pumps and treatment systems, which account for a significant portion of its income. Additionally, Xylem offers services related to the installation, maintenance, and optimization of water systems, contributing further to its revenue. The company also benefits from partnerships with municipalities, industrial clients, and other organizations that require reliable water management solutions. Government investments in water infrastructure and sustainability initiatives further enhance Xylem's earnings potential, as they align with the company's mission to address global water issues.

Xylem Earnings Call Summary

Earnings Call Date:Jul 31, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Nov 04, 2025
Earnings Call Sentiment Positive
Xylem's earnings call reflects a strong overall performance for the second quarter, with record adjusted EBITDA margins, robust revenue growth, and increased adjusted EPS. The company is raising its full-year guidance, reflecting confidence in continued strong performance. However, challenges such as economic issues in China, funding delays in the UK and Canada, and tariff impacts present some headwinds. Despite these challenges, the company shows resilience through successful simplification efforts and strong order growth in key segments.
Q2-2025 Updates
Positive Updates
Record Adjusted EBITDA Margin
Achieved a quarterly record adjusted EBITDA margin of 21.8%, up 100 basis points year-over-year.
Strong Revenue Growth
Revenue growth was strong at 6% in the quarter, driven by measurement and control solutions and contributions from all segments.
Increase in Adjusted EPS
Adjusted EPS grew in the mid-teens, with Q2 EPS of $1.26, $0.12 above the midpoint of guidance and up 16% versus the prior year.
Raising Full-Year Guidance
Raising full year guidance for revenue to $8.9 billion to $9 billion and adjusted EPS guide to $4.70 to $4.85.
Order Growth in Measurement and Control Solutions
Orders grew 12% organically with strength across water and energy metering, with backlog remaining healthy at $1.7 billion.
Successful Simplification and 80/20 Initiatives
Simplification efforts are driving measurable improvements in productivity and customer responsiveness, contributing to margin expansion.
Negative Updates
Economic Challenges in China
Ongoing economic challenges in China were noted, with a decline in orders by around 18% year-over-year.
Funding Delays in UK and Canada
Orders in the Water Infrastructure segment declined by 2% due to funding delays in the UK and Canada, expected to resolve in the second half.
Impact of Tariffs
Tariff impacts remain a challenge, with some dilutive impact on margins and ongoing uncertainty around final timings and levels.
Lower Margin Legacy Projects
Some lower-margin legacy energy projects in the backlog added pressure on margins, expected to sequentially improve by Q4.
Company Guidance
During Xylem's Second Quarter 2025 Results Conference Call, the company reported strong performance and provided updated guidance. The quarter saw a 6% revenue growth driven by outperformance in Measurement and Control Solutions (MCS), with an adjusted EBITDA margin reaching a record 21.8%, up 100 basis points year-over-year. Adjusted EPS grew by 16%, bolstered by resilient demand, particularly in smart metering, which saw double-digit growth. Consequently, Xylem raised its full-year guidance, expecting revenue between $8.9 billion and $9 billion, representing 4% to 5% total growth, with adjusted EPS guidance increased to $4.70 to $4.85. The company maintained its adjusted EBITDA margin guidance at 21.3% to 21.8%, despite expecting a slight margin dilution due to tariffs. Xylem's strategic focus on simplification and targeted acquisitions, such as Vacom and Envirex, is expected to drive further growth and efficiency.

Xylem Financial Statement Overview

Summary
Xylem exhibits strong financial health with consistent revenue growth and solid profitability margins. The balance sheet is stable with low leverage, enhancing its risk profile. However, the decline in free cash flow is a concern that needs to be addressed to ensure continued financial flexibility.
Income Statement
85
Very Positive
Xylem has demonstrated strong revenue growth with a TTM increase of 1.54% and consistent annual growth over the past years. The company maintains healthy profitability margins, with a TTM gross profit margin of 37.48% and a net profit margin of 14.59%. EBIT and EBITDA margins are also robust, indicating efficient operations. The upward trajectory in revenue and profitability suggests a positive outlook.
Balance Sheet
78
Positive
The balance sheet reflects a solid financial position with a low debt-to-equity ratio of 0.18 in the TTM period, indicating low leverage. The return on equity is reasonable at 8.70%, showing effective use of equity to generate profits. The equity ratio stands at a healthy level, suggesting financial stability. However, the decrease in total debt over time enhances the company's risk profile.
Cash Flow
70
Positive
Xylem's cash flow performance shows mixed results. The TTM free cash flow growth rate is negative at -0.9%, indicating a decline in free cash flow. However, the operating cash flow to net income ratio is 0.53, and the free cash flow to net income ratio is 0.72, suggesting adequate cash generation relative to net income. The company needs to address the decline in free cash flow to maintain financial flexibility.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue8.73B8.56B7.36B5.52B5.20B4.88B
Gross Profit3.30B3.21B2.72B2.08B1.98B1.83B
EBITDA1.77B1.69B1.12B726.00M832.00M613.00M
Net Income938.00M890.00M609.00M355.00M427.00M254.00M
Balance Sheet
Total Assets17.19B16.49B16.11B7.95B8.28B8.75B
Cash, Cash Equivalents and Short-Term Investments1.17B1.12B1.02B944.00M1.35B1.88B
Total Debt2.12B2.13B2.39B1.95B2.51B3.15B
Total Liabilities5.88B5.62B5.94B4.45B5.05B5.77B
Stockholders Equity11.07B10.64B10.17B3.49B3.22B2.97B
Cash Flow
Free Cash Flow881.00M942.00M566.00M388.00M330.00M641.00M
Operating Cash Flow1.22B1.26B837.00M596.00M538.00M824.00M
Investing Cash Flow-494.00M-482.00M-628.00M-191.00M-183.00M-169.00M
Financing Cash Flow-440.00M-615.00M-157.00M-790.00M-855.00M473.00M

Xylem Technical Analysis

Technical Analysis Sentiment
Positive
Last Price144.62
Price Trends
50DMA
135.18
Positive
100DMA
127.62
Positive
200DMA
125.11
Positive
Market Momentum
MACD
2.29
Positive
RSI
64.79
Neutral
STOCH
72.51
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For XYL, the sentiment is Positive. The current price of 144.62 is above the 20-day moving average (MA) of 142.79, above the 50-day MA of 135.18, and above the 200-day MA of 125.11, indicating a bullish trend. The MACD of 2.29 indicates Positive momentum. The RSI at 64.79 is Neutral, neither overbought nor oversold. The STOCH value of 72.51 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for XYL.

Xylem Risk Analysis

Xylem disclosed 26 risk factors in its most recent earnings report. Xylem reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Xylem Peers Comparison

Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
$9.44B30.2217.75%0.64%2.96%12.62%
78
Outperform
$34.89B37.088.76%1.08%3.97%21.95%
76
Outperform
$17.90B29.4817.15%0.90%-0.25%-7.32%
75
Outperform
$4.24B28.3917.33%0.99%10.19%20.71%
74
Outperform
$7.11B24.0713.91%1.53%3.15%14.18%
69
Neutral
$552.96M40.2011.97%14.64%182.19%
64
Neutral
$10.95B16.378.81%1.96%2.68%-15.33%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
XYL
Xylem
144.62
10.38
7.73%
FLS
Flowserve
54.86
6.93
14.46%
GHM
Graham
50.15
19.10
61.51%
MWA
Mueller Water Products
27.26
6.30
30.06%
PNR
Pentair
109.34
24.25
28.50%
WTS
Watts Water Technologies
284.36
92.50
48.21%

Xylem Corporate Events

Executive/Board ChangesShareholder Meetings
Xylem Concludes Annual Shareholders Meeting with Key Decisions
Neutral
May 16, 2025

On May 13, 2025, Xylem Inc. held its Annual Meeting of Shareholders, where 88.68% of the company’s outstanding common stock was represented. Key outcomes included the election of nine directors, ratification of Deloitte & Touche LLP as the independent auditor for 2025, approval of executive compensation, and the rejection of a shareholder proposal for special shareholder meeting improvements.

The most recent analyst rating on (XYL) stock is a Buy with a $148.00 price target. To see the full list of analyst forecasts on Xylem stock, see the XYL Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 19, 2025