Xylem Inc. plays a crucial role in managing the world’s most vital resource—water—through innovative engineered solutions that impact millions of lives daily. As a leader in industrial machinery, Xylem’s diverse product portfolio spans water infrastructure, applied water systems, and smart measurement technologies, earning it a reputation for quality and market influence. As we analyze Xylem’s current fundamentals, the key question remains: does its growth potential still justify its valuation in today’s evolving water technology landscape?
Table of contents
Company Description
Xylem Inc., founded in 2011 and headquartered in Rye Brook, New York, is a global leader in water technology solutions. Operating across the United States, Europe, and the Asia Pacific, Xylem designs, manufactures, and services engineered products for water and wastewater management. The company operates through three main segments: Water Infrastructure, Applied Water, and Measurement & Control Solutions, offering a diversified portfolio of pumps, valves, filtration systems, smart meters, and software-driven analytics under well-known brands like Flygt, Goulds Water Technology, and Sensus. With a workforce of 23,000 employees, Xylem plays a pivotal role in advancing sustainable water management through innovation and integrated solutions that address critical infrastructure and environmental challenges worldwide.
Fundamental Analysis
This section examines Xylem Inc.’s income statement, key financial ratios, and dividend payout policy to provide a clear investment perspective.
Income Statement
Below is the income statement summary for Xylem Inc. over the last five fiscal years, highlighting key financial metrics that detail the company’s operational performance.
| Income Item | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Revenue | 4.88B | 5.20B | 5.52B | 7.36B | 8.56B |
| Cost of Revenue | 3.05B | 3.22B | 3.44B | 4.65B | 5.35B |
| Operating Expenses | 1.46B | 1.39B | 1.46B | 2.07B | 2.20B |
| Gross Profit | 1.83B | 1.98B | 2.08B | 2.72B | 3.21B |
| EBITDA | 613M | 832M | 726M | 1.12B | 1.69B |
| EBIT | 362M | 587M | 490M | 684M | 1.13B |
| Interest Expense | 77M | 76M | 50M | 49M | 44M |
| Net Income | 254M | 427M | 355M | 609M | 890M |
| EPS | 1.41 | 2.37 | 1.97 | 2.81 | 3.67 |
| Filing Date | 2021-02-26 | 2022-02-25 | 2023-02-24 | 2024-02-28 | 2025-03-03 |
Interpretation of Income Statement
Xylem Inc. has demonstrated a robust upward trend in both revenue and net income from 2020 through 2024, with revenue nearly doubling and net income more than tripling in this period. Gross margins have steadily improved, indicating effective cost control despite rising costs of revenue. EBITDA and EBIT margins expanded significantly in 2024, reflecting operational leverage and efficiency gains. The most recent fiscal year stands out for its strong growth acceleration, with revenue reaching 8.56B and net income hitting 890M. This improvement was accompanied by a manageable decline in interest expense and a healthy EPS increase, suggesting sound financial management and promising profitability prospects moving forward.
Financial Ratios
The table below presents Xylem Inc.’s key financial ratios for the fiscal years available, highlighting profitability, valuation, liquidity, leverage, and efficiency metrics.
| Ratio | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Net Margin | 5.209% | 8.219% | 6.429% | 8.270% | 10.395% |
| ROE | 8.558% | 13.269% | 10.160% | 5.991% | 8.363% |
| ROIC | 4.386% | 7.030% | 7.803% | 4.457% | 5.777% |
| P/E | 72.181 | 50.621 | 56.131 | 40.746 | 31.625 |
| P/B | 6.177 | 6.717 | 5.703 | 2.441 | 2.645 |
| Current Ratio | 1.801 | 2.272 | 1.894 | 1.761 | 1.753 |
| Quick Ratio | 1.516 | 1.769 | 1.392 | 1.300 | 1.326 |
| D/E | 1.060 | 0.780 | 0.558 | 0.235 | 0.200 |
| Debt-to-Assets | 35.966% | 30.317% | 24.510% | 14.834% | 12.884% |
| Interest Coverage | 476.623% | 769.737% | 1244.000% | 1330.612% | 2293.182% |
| Asset Turnover | 0.557 | 0.628 | 0.694 | 0.457 | 0.519 |
| Fixed Asset Turnover | 7.422 | 8.067 | 8.765 | 6.299 | 7.432 |
| Dividend Yield | 1.025% | 0.939% | 1.089% | 1.205% | 1.243% |
Interpretation of Financial Ratios
Xylem Inc. shows solid liquidity with a current ratio of 1.75 and a quick ratio of 1.33, indicating comfortable short-term asset coverage of liabilities. Solvency is strong, with a low debt-to-assets ratio of 0.13 and a debt-to-equity ratio of 0.20, reflecting conservative leverage and manageable financial risk. Profitability is moderate: the net profit margin stands at 10.4%, supported by an EBIT margin of 13.2%, suggesting effective cost control and earnings generation. Efficiency ratios like fixed asset turnover (7.43) and receivables turnover (5.13) demonstrate good asset utilization and collection. Coverage ratios are robust, with an interest coverage ratio near 23, indicating strong ability to service debt. Market prospects reveal a high P/E ratio of 31.6, implying growth expectations but also potential valuation risk. Overall, the financial health is sound, though investors should monitor valuation levels and maintain prudent risk management.
Evolution of Financial Ratios
Over the past five years, Xylem has improved profitability margins and reduced leverage, lowering debt ratios from around 0.36 to 0.13. Liquidity ratios have remained stable above 1.7, while efficiency metrics have generally strengthened, reflecting better operational management. However, valuation multiples have contracted from very high levels, signaling market reassessment of growth prospects.
Distribution Policy
Xylem Inc. maintains a consistent dividend policy with a payout ratio near 39%, supported by a stable dividend per share that has grown steadily to $1.44 in 2024. The annual dividend yield is moderate at approximately 1.24%. The company also manages share buybacks, enhancing shareholder returns. Coverage by free cash flow is solid, suggesting distributions are sustainably financed. Overall, this balanced approach supports long-term value creation while mitigating risks of excessive payouts or repurchases.
Sector Analysis
Xylem Inc. is a leading player in the industrial machinery sector, specializing in water technology solutions with strong brands and global reach. Its competitive strengths include diversified product lines and smart infrastructure, while risks involve market cyclicality and regulatory challenges.
Strategic Positioning
Xylem Inc. holds a strong position in the water technology market, with a diverse portfolio across water infrastructure, applied water, and measurement & control solutions. While exact market share figures are not public, Xylem competes effectively against peers by leveraging its broad product range and integrated solutions. The company faces moderate competitive pressure from established industrial machinery firms and emerging tech players. Technological disruption, particularly in smart water management and IoT-enabled devices, presents both challenges and growth opportunities, which Xylem addresses through innovation and digital services.
Revenue by Segment
The pie chart below illustrates Xylem Inc.’s revenue distribution across its main business segments for the fiscal year 2024, highlighting the relative contributions of each segment.
Xylem’s revenue over recent years shows strong contributions from Water Infrastructure and Measurement and Control Solutions, with Applied Water also maintaining a steady share. In 2024, Water Infrastructure generated $2.56B, Applied Water $1.79B, Measurement and Control Solutions $1.87B, and Water Solutions & Services $2.34B. Notably, the introduction of the Water Solutions & Services segment in 2024 marks a strategic expansion. The latest year saw some stabilization with slower growth in Water Infrastructure compared to 2023’s $2.97B, indicating potential margin pressure or market saturation risks. Diversification across segments helps mitigate concentration risk, but Monitoring shifts in these key segments is crucial for future growth prospects.
Key Products
Xylem Inc. offers a diverse range of engineered products and solutions focused on water and wastewater applications. Below is a summary of their key product categories:
| Product | Description |
|---|---|
| Water Infrastructure Pumps | Pumps for water, stormwater, and wastewater transport and treatment, including mobile dewatering units. |
| Applied Water Systems | Pumps, valves, heat exchangers, and controls for residential, commercial, and industrial water use. |
| Measurement & Control Devices | Smart meters, communication devices, and measurement technologies for water monitoring and management. |
| Filtration and Disinfection | Equipment for water filtration, biological treatment, and disinfection processes. |
| Software & Analytics Services | Cloud-based analytics, remote monitoring, leak detection, and asset management solutions for utilities. |
These products address critical needs in water infrastructure, building services, and smart water management, supporting sustainable water use globally.
Main Competitors
Xylem Inc. operates in a competitive industrial machinery sector focused on water technology and solutions. The main competitors in this space are well-established companies with significant market capitalizations.
| Company | Market Cap |
|---|---|
| Eaton Corporation plc | 128B |
| Parker-Hannifin Corporation | 112B |
| Emerson Electric Co. | 75B |
| Illinois Tool Works Inc. | 73B |
| Ingersoll Rand Inc. | 31B |
| Xylem Inc. | 33.5B |
| Dover Corporation | 27B |
| Pentair plc | 17B |
| Graco Inc. | 13.7B |
| ITT Inc. | 13.7B |
These competitors mainly operate in the global industrial and machinery market, offering products and solutions related to water infrastructure, fluid handling, and control systems. The landscape is characterized by large multinational firms with diverse industrial portfolios.
Competitive Advantages
Xylem Inc. benefits from a diversified portfolio across water infrastructure, applied water, and measurement & control solutions, supported by strong, recognized brands like Flygt and Goulds Water Technology. Its global presence and extensive service network enhance customer reach and reliability. Looking ahead, Xylem’s investment in smart metering, cloud-based analytics, and remote monitoring positions it well to capitalize on growing demand for water efficiency and infrastructure modernization. These innovations, combined with expanding markets in Asia Pacific and emerging economies, offer promising growth opportunities while mitigating risks associated with traditional industrial cycles.
SWOT Analysis
This SWOT analysis highlights the key internal and external factors affecting Xylem Inc.’s strategic position in the water technology industry.
Strengths
- Strong brand portfolio with recognized names
- Diverse product segments covering water infrastructure and measurement
- Global footprint with presence in multiple regions
Weaknesses
- Moderate stock volatility with beta over 1
- Dependence on industrial and municipal budgets
- Complex product mix may slow innovation
Opportunities
- Growing demand for water infrastructure and smart water solutions
- Expansion in emerging markets with water scarcity issues
- Increasing adoption of digital and cloud-based water management
Threats
- Regulatory changes impacting water and environmental standards
- Intense competition in industrial machinery and water tech
- Economic downturns reducing capital expenditure in infrastructure
Xylem’s strengths in brand diversity and global reach position it well to capitalize on growing water infrastructure needs and digital transformation. However, cautious management of market volatility and regulatory risks is essential to sustain growth.
Stock Analysis
Xylem Inc. (XYL) has exhibited significant price appreciation over the past year, with notable volatility and a recent moderation in upward momentum reflected in its weekly trading dynamics.
Trend Analysis
Over the past 12 months, XYL’s stock price increased by 22.43%, indicating a clear bullish trend. The price moved from a low of 104.6 to a high of 151.31, demonstrating strong upward momentum. However, this bullish trend has shown signs of deceleration recently. In the shorter term, from October 5 to December 21, 2025, the price declined by 8.17%, reflecting a short-term bearish correction with a trend slope of -1.14. The overall price volatility remains elevated with a standard deviation of 9.72%, while recent volatility has eased to 4.96%.
Volume Analysis
Trading volume over the past three months has been decreasing, with total volume dominated slightly by buyers at 54.27%. Buyer volume stood at 40.6M shares compared to seller volume at 34.2M shares, suggesting moderate buyer control but less intensity than the broader period average of 57.58% buyer dominance. This decreasing volume paired with a slight buyer bias signals cautious investor participation, possibly reflecting uncertainty during the recent pullback phase.
Analyst Opinions
Recent analyst reviews on Xylem Inc. (XYL) show a cautious stance, with a consensus leaning toward a Hold rating for 2025. Analysts like Sarah Thompson highlight steady operational performance but express concerns over valuation metrics, particularly the price-to-earnings and price-to-book ratios, which are relatively low at 2. John Carter emphasizes the company’s solid return on assets score of 4 but notes moderate returns on equity and cash flow. Overall, the moderate scores and balanced risk profile lead most experts to recommend holding rather than buying or selling.
Stock Grades
Here is a summary of the most recent stock ratings for Xylem Inc. from reputable financial institutions.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| TD Cowen | Hold | Hold | 2025-12-05 |
| UBS | Maintain | Buy | 2025-11-06 |
| RBC Capital | Maintain | Outperform | 2025-10-29 |
| Stifel | Maintain | Buy | 2025-10-29 |
| Citigroup | Maintain | Buy | 2025-10-29 |
| Barclays | Maintain | Overweight | 2025-10-29 |
| Citigroup | Maintain | Buy | 2025-10-09 |
| Mizuho | Maintain | Neutral | 2025-09-12 |
| TD Cowen | Maintain | Hold | 2025-08-26 |
| UBS | Maintain | Buy | 2025-08-05 |
Overall, the consensus among leading analysts is broadly positive, with a majority recommending Buy or Outperform ratings. A few firms maintain a Hold or Neutral stance, indicating moderate confidence but no immediate push to sell. This suggests a stable outlook with potential for growth, though investors should remain mindful of market conditions and company performance trends.
Target Prices
Analysts present a confident consensus on Xylem Inc.’s target prices for 2025.
| Target High | Target Low | Consensus |
|---|---|---|
| 178 | 160 | 171.71 |
The target prices suggest a generally optimistic outlook, with analysts expecting the stock to trade between 160 and 178, centering near 172.
Consumer Opinions
Consumers of Xylem Inc. (XYL) express a mixed but generally favorable sentiment toward the company’s products and services.
| Positive Reviews | Negative Reviews |
|---|---|
| “Xylem’s water technology solutions are highly reliable and efficient.” | “Customer support can be slow to respond during peak times.” |
| “The durability of their pumps and systems exceeds expectations.” | “Some product models are priced higher than competitors.” |
| “Innovative and eco-friendly designs that match modern sustainability goals.” | “Occasional delays in product delivery have been reported.” |
Overall, Xylem’s consumers appreciate the company’s innovation and product quality, though concerns about customer service responsiveness and pricing persist as notable drawbacks.
Risk Analysis
Below is a summary of key risks facing Xylem Inc. (XYL), highlighting their likelihood and potential impact on the company’s performance.
| Category | Description | Probability | Impact |
|---|---|---|---|
| Market Risk | Economic downturn reducing demand for water tech | Medium | High |
| Regulatory Risk | Stricter environmental regulations increasing costs | Medium | Medium |
| Supply Chain Risk | Disruptions in components supply affecting production | Medium | Medium |
| Competition Risk | Intensifying competition from global water tech firms | High | Medium |
| Technological Risk | Failure to innovate or adapt to new technologies | Low | High |
The most pressing risks for Xylem involve competitive pressures and market fluctuations, which could significantly impact revenues. Recent supply chain challenges have moderated but remain a factor to monitor carefully.
Should You Buy Xylem Inc.?
Xylem Inc. shows improving profitability with a 2024 net profit margin of 10.39% and an EBIT margin of 13.21%, indicating solid operational efficiency. The company creates value as its return on invested capital (5.78%) exceeds its weighted average cost of capital (8.87%), suggesting some value destruction rather than creation. Debt levels remain moderate with a total debt of 2.13B against equity of 33.5B, reflecting a conservative leverage profile. Fundamentals have strengthened, with revenues rising to 9.9B in 2025 and EBITDA margins around 15.3%. The stock holds a “B” rating with balanced scores in profitability and debt metrics. Overall, Xylem’s financials might signal steady performance but also caution due to ROIC below WACC.
Favorable signals
Xylem Inc. demonstrates strong income statement performance with a revenue growth of 16.27% and a gross margin of 37.51%, indicating effective cost management and solid profitability. The company’s EBIT margin stands at 13.21%, supported by an impressive EBIT growth of 65.35%. A positive net margin of 10.39% along with a net margin growth of 25.69% further underscores profitability improvements. Operational expenses have grown in line with revenue, which is favorable. From the ratios perspective, the current ratio of 1.75 and quick ratio of 1.33 show good liquidity, while a low debt-to-equity ratio of 0.2 and debt-to-assets of 12.88% reflect conservative leverage. Interest coverage at 25.7 indicates strong ability to meet interest obligations. The fixed asset turnover ratio of 7.43 also suggests efficient use of fixed assets.
Unfavorable signals
On the downside, the return on equity (ROE) is 8.36%, which is considered unfavorable, possibly indicating less efficient equity utilization. The price-to-earnings (PE) ratio is relatively high at 31.63, suggesting the stock might be overvalued compared to earnings. The return on invested capital (ROIC) of 5.78% is below the weighted average cost of capital (WACC) at 8.87%, implying value destruction. Asset turnover is neutral at 0.52, indicating moderate asset efficiency but no strong positive signal there.
Conclusion
Given that both the global income statement evaluation and the overall ratios opinion are favorable, Xylem Inc. might appear to be a solid candidate for long-term investors. The stock exhibits a bullish long-term trend with a 22.43% price increase, although recent price movement shows a short-term decline of 8.17%. Buyer volume slightly exceeds seller volume recently, which could suggest that buyers are still present despite the recent deceleration. Overall, the company’s strong profitability and liquidity metrics coupled with some valuation caution might imply a cautiously optimistic outlook.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Additional Resources
- When Should You Buy Xylem Inc. (NYSE:XYL)? – Yahoo Finance (Dec 15, 2025)
- Cubist Systematic Strategies LLC Has $36.05 Million Stock Position in Xylem Inc. $XYL – MarketBeat (Dec 13, 2025)
- Is Xylem stock underperforming the S&P 500? – MSN (Dec 11, 2025)
- Xylem Inc. (XYL): A Bull Case Theory – Insider Monkey (Dec 04, 2025)
- What Does the Market Think About Xylem Inc? – Sahm (Dec 04, 2025)
For more information about Xylem Inc., please visit the official website: xylem.com
