How Does This Water Technology Business Operate?
Xylem Inc designs and sells equipment and solutions tied to water. Its offering centers on moving, treating, and analyzing water, serving customers that need reliable water infrastructure and related services. The company operates at large scale, with an equity value around USD 26 billion. For investors, it’s the kind of business where the quality of returns on capital tends to matter as much as the top line.
Are Margins And Cash Flow Holding Steady?
FundamentalsIn 2025, reported in USD, Xylem generated revenue of about USD 9.0 billion, alongside EBIT of USD 1.2 billion and net income of USD 950 million. Revenue grew 5.5% versus the prior year, while trailing margins were 38.61% gross, 13.41% operating, and 10.79% net.
Cash conversion, viewed through the cash flow proxy, was roughly USD 928 million, after USD 267 million of depreciation and amortization and USD 331 million of capital spending. The balance sheet carried USD 1.48 billion of cash against USD 1.07 billion of total debt, and trailing ROE was 8.77%.
Is The Market Pricing Xylem Fairly Now?
DCF / MultiplesAt USD 108.33, the stock is essentially sitting on the central DCF estimate, with the valuation range running from USD 69.59 in a weaker outcome through USD 109.09 to USD 156.63 in a stronger outcome.
That pricing also comes with headline multiples of 26.54x trailing earnings and 18.32x EV/EBITDA, which frame the shares as a business valued for sustained profitability rather than a low-expectation reset.
Fair Value With Execution Risk
TakeawayThe stock reads like a fair-value situation today. The case depends on returns on capital holding up. Margins and cash generation need to stay consistent. If ROE drifts lower, the multiple can compress quickly. If cash conversion improves, the valuation can look easier to defend.