Xylem Inc. (XYL) — Fundamental Analysis & Key Financial Ratios

Kaplio's reading: Xylem Inc.

Updated on October 1, 2026 · accounts published on July 28, 2026

Reading of October 1, 2026: A financially solid business with record margins

Xylem trades at a P/E of 24.1 over the last 12 months, 40 % below its ten-year median of 39.9 and the lowest level of the past decade.

• Is Xylem expensive or cheap? At a P/E of 24.1, Xylem trades 40 % below its ten-year median and at its lowest multiple of the decade.
• How is the business doing? Xylem's fiscal 2025 operating margin of 13.5 % was its highest in 12 years, against a 2014-2025 average of 11.1 %.
• Does Xylem turn its margin into cash, and what multiple does it trade at relative to its cycle? Free cash flow equalled 95 % of net income in fiscal 2025, above the 85 % that marks a healthy industrial.
• How strong is the balance sheet? Net debt was $2.52 per share in fiscal 2025, just 0.3× EBITDA, and the dividend has risen 11 years in a row.
• What to expect from the next earnings? Analysts expect EPS of $1.47 when Xylem reports on November 3, 2026; it beat estimates in 7 of the last 8 quarters.

Is Xylem expensive or cheap?

Over the last 12 months Xylem's P/E is 24.1. That is 40 % below its ten-year median of 39.9, and it has not traded lower at any point in the past decade, when the range ran from 23.6 to 97.3. It is also 7 % below the sector median of 26.0. Its EV/EBITDA of 13.7× compares with a seven-year average of 24.2×, and its free cash flow yield is 3.7 %. The multiple fell along with the price: the stock is down 31 % over 12 months and sits 33 % below its 52-week high of $152.95. The multiple now looks like an ordinary industrial's, without the premium Xylem used to carry.

How is the business doing?

Over the last 12 months revenue grew 5.5 % and EPS grew 7.4 %. The operating margin reached 14.5 %, up from 13.5 % in fiscal 2025. That 13.5 % was already the best of the 12 fiscal years since 2014 and well above their 11.1 % average. The weak point is return on capital. ROIC of 6.9 % over the last 12 months is 2.0 points below the sector median of 8.9 %, and it has topped 10 % in only one of the last ten fiscal years. ROE of 9.2 % points the same way: margins are improving faster than returns on the capital the business uses.

Does Xylem turn its margin into cash, and what multiple does it trade at relative to its cycle?

Industrials are semi-cyclical, so one good year can make earnings look better than they are. That is why the sector is judged on operating margin, cash conversion and multiples against their own cycle. Xylem's operating margin was 13.5 % in fiscal 2025, above the 12 % healthy threshold, and it turned 95 % of net income into free cash flow. Capex of 3.7 % of revenue sits just under the healthy 4 % to 8 % range. The one test it fails is ROIC: 6.9 % over the last 12 months against the 15 % a healthy industrial earns. Against its own history, the P/E of 24.1 and the EV/EBITDA of 13.7× are both below 90 % of their averages (43.2 and 24.2×), which is the cheap zone.

How strong is the balance sheet?

Debt is not a concern. Net debt of $2.52 per share in fiscal 2025 equals 2.5 % of the current price and 0.3× EBITDA, a tenth of the 3× ceiling for a healthy industrial. Over the last 12 months debt to equity is 0.29 and the current ratio is 1.61. The Altman Z of 4.5 is in the safe zone, well above 2.99, and the Piotroski score of 7 out of 9 signals high quality. The dividend yields 1.7 % and has grown for 11 consecutive fiscal years. In fiscal 2025 it took 41 % of earnings, which leaves room to keep raising it.

What to expect from the next earnings?

On July 28, 2026 Xylem reported EPS of $1.46 against $1.35 expected, an 8.1 % beat, and it has topped estimates in 7 of the last 8 quarters. For the quarter due on November 3, 2026, the consensus is $1.47. The fiscal 2026 EPS estimate has not moved in the last 16 days, holding at $5.66 across 13 analysts, and revenue forecasts have barely changed either. Of 40 analysts, 19 say buy, 20 hold and 1 sell, a lukewarm stance given how low the multiple is. The test is whether margins hold up near record levels.

How this was prepared: the data comes from companies' official filings, collected by a professional provider, and from Kaplio's analysis engine (trailing-12-month ratios, 10 years of history and sector medians computed across US-listed companies). The text is written from that data alone, every figure is checked against it before publication, and it is reviewed when the company reports results. This is not investment advice.