XYL

Essential Insights for Xylem Stock Investors

It hasn't been a great morning session for Xylem investors, who have watched their shares sink by -2.0% to a price of $141.38. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.

Xylem's Valuation Is in Line With Its Sector Averages:

Xylem Inc., together with its subsidiaries, engages in the design, manufacture, and servicing of engineered products and solutions worldwide. The company belongs to the Industrials sector, which has an average price to earnings (P/E) ratio of 22.19 and an average price to book (P/B) ratio of 4.06. In contrast, Xylem has a trailing 12 month P/E ratio of 48.9 and a P/B ratio of 3.36.

Xylem's PEG ratio is 2.87, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.

Wider Gross Margins Than the Industry Average of 13.92%:

2018 2019 2020 2021 2022 2023
Revenue (M) $5,207 $5,249 $4,876 $5,195 $5,522 $7,364
Gross Margins 39% 39% 38% 38% 38% 37%
Net Margins 11% 8% 5% 8% 6% 8%
Net Income (M) $549 $401 $254 $427 $355 $609
Net Interest Expense (M) $82 $67 $77 $76 $50 $49
Depreciation & Amort. (M) $117 $117 $117 $118 $111 $193
Diluted Shares (M) 181 181 181 182 181 218
Earnings Per Share $3.03 $2.21 $1.4 $2.35 $1.96 $2.79
EPS Growth n/a -27.06% -36.65% 67.86% -16.6% 42.35%
Avg. Price $68.31 $73.67 $76.48 $114.53 $87.36 $142.2768
P/E Ratio 22.4 33.04 54.24 48.32 44.35 50.63
Free Cash Flow (M) $349 $613 $641 $330 $388 $566
CAPEX (M) $237 $226 $183 $208 $208 $271
EV / EBITDA 18.55 24.58 30.98 30.94 22.72 31.85
Total Debt (M) $2,308 $2,316 $3,084 $2,440 $1,880 $2,285
Net Debt / EBITDA 2.61 2.64 2.5 1.55 1.28 1.5
Current Ratio 1.51 1.63 1.8 2.27 1.89 1.76

Xylem benefits from growing revenues and increasing reinvestment in the business, wider gross margins than its peer group, and generally positive cash flows. The company's financial statements show a decent current ratio of 1.76 and healthy leverage levels. Furthermore, Xylem has flat EPS growth.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.

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