Now trading at a price of $106.47, Xylem has moved 0.3% so far today.
Over the last year, Xylem logged a -5.0% change, with its stock price reaching a high of $118.58 and a low of $87.59. Over the same period, the stock underperformed the S&P 500 index by -20.0%. As of April 2023, the company's 50-day average price was $94.82. Xylem Inc., together with its subsidiaries, engages in the design, manufacture, and servicing of engineered products and solutions for the water and wastewater applications in the United States, Europe, the Asia Pacific, and internationally. Based in Washington, DC, the large-cap Industrials company has 17,800 full time employees. Xylem has offered a 1.2% dividend yield over the last 12 months.
Increasing Revenues but Narrowing Margins:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $5,207 | $5,249 | $4,876 | $5,195 | $5,522 | $6,752 |
| Revenue Growth | n/a | 0.81% | -7.11% | 6.54% | 6.29% | 22.27% |
| Gross Margins | 39% | 39% | 38% | 38% | 38% | 38% |
| Operating Margins | 13% | 9% | 8% | 11% | 11% | 9% |
| Net Margins | 11% | 8% | 5% | 8% | 6% | 7% |
| Net Income (MM) | $549 | $401 | $254 | $427 | $355 | $492 |
| Net Interest Expense (MM) | $82 | $67 | $77 | $76 | $50 | $48 |
| Earnings Per Share | $3.03 | $2.21 | $1.4 | $2.35 | $1.96 | $2.44 |
| EPS Growth | n/a | -27.06% | -36.65% | 67.86% | -16.6% | 24.49% |
| Diluted Shares (MM) | 181 | 181 | 181 | 182 | 181 | 269 |
| Free Cash Flow (MM) | $349 | $613 | $641 | $330 | $388 | $507 |
| Capital Expenditures (MM) | $237 | $226 | $183 | $208 | $208 | $237 |
| Current Ratio | 1.51 | 1.63 | 1.8 | 2.27 | 1.89 | 1.72 |
| Long Term Debt (MM) | $2,051 | $2,040 | $2,484 | $2,440 | $1,880 | $2,253 |
| LT Debt to Equity | 0.74 | 0.69 | 0.84 | 0.76 | 0.54 | 0.23 |
Xylem has growing revenues and a flat capital expenditure trend and wider gross margins than its peer group. Additionally, the company's financial statements display decent operating margins with a negative growth trend and healthy leverage. However, the firm has declining EPS growth. Finally, we note that Xylem has irregular cash flows.
A Lower P/B Ratio Than Its Sector Average but Trades Above Its Graham Number:
Xylem has a trailing twelve month P/E ratio of 38.7, compared to an average of 22.19 for the Industrials sector. Based on its EPS guidance of $4.06, the company has a forward P/E ratio of 23.4. The company doesn't issue forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is -3.5%. On this basis, the company's PEG ratio is -10.92, which indicates that its shares are overpriced. In contrast, the market is likely undervaluing Xylem in terms of its equity because its P/B ratio is 2.58 while the sector average is 4.06. The company's shares are currently trading 135.4% above their Graham number. In conclusion, Xylem's impressive cash flow trend, decent P/B ratio, and reasonable use of leverage demonstrate that the company may still be fairly valued — despite its elevated earnings multiple.
Xylem Has an Average Rating of Buy:
The 11 analysts following Xylem have set target prices ranging from $100.0 to $135.0 per share, for an average of $118.18 with a buy rating. As of April 2023, the company is trading -19.8% away from its average target price, indicating that there is an analyst consensus of some upside potential.
Xylem has an average amount of shares sold short because 2.3% of the company's shares are sold short. Institutions own 76.7% of the company's shares, and the insider ownership rate stands at 0.29%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 12% stake in the company is worth $2,966,376,568.
