Company Reports

Narrow-moat-rated Xylem reported strong first-quarter results, increasing adjusted earnings per share by 14% from the prior-year period. We’ve raised our fair value estimate to $110 per share from $106 to reflect our slightly more optimistic near-term revenue growth and operating margin expectations as well as the time value of money.

Xylem is one of the leading water technology companies in the world. Its extensive portfolio spans a wide range of equipment and solutions for the water industry, including the transport, treatment, testing, and efficient use of water for public utilities as well as industrial, commercial, and residential customers. Xylem operates four business segments: water infrastructure, applied water, measurement and control solutions, and water solutions and services.

Narrow-moat-rated Xylem finished 2023 with a solid fourth quarter, as its full-year revenue of $7.4 billion and adjusted EPS of $3.78 both beat our estimates of $7.3 billion and $3.73. We maintain our $106 fair value estimate but may further adjust our valuation assumptions when the company issues its 10-K.

Xylem is one of the leading water technology companies in the world. Its extensive portfolio spans a wide range of equipment and solutions for the water industry, including the transport, treatment, testing, and efficient use of water for public utilities as well as industrial, commercial, and residential customers. Xylem operates three business segments: water infrastructure, applied water, and measurement and control solutions.

We’ve increased our fair value estimate for Xylem to $106 from $104 after the narrow-moat-rated water technology firm reported strong third-quarter results, featuring a 14% year-over-year increase in adjusted EPS, from $0.87 to $0.99. The fair value increase is driven by our slightly more optimistic near-term revenue growth forecast as well as time value of money.

Xylem is one of the leading water technology companies in the world. Its extensive portfolio spans a wide range of equipment and solutions for the water industry, including the transport, treatment, testing, and efficient use of water for public utilities as well as industrial, commercial, and residential customers. Xylem operates three business segments: water infrastructure, applied water, and measurement and control solutions.

We are maintaining our $104 fair value estimate and Standard capital allocation rating for Xylem after the company announced its leadership succession plan. Matthew Pine, the firm’s current chief operating officer, will take the helm as chief executive officer on Jan. 1, 2024, while William Grogan, former chief financial officer of Idex, will succeed Sandra Rowland as CFO on Oct. 1, 2023.

Xylem is one of the leading water technology companies in the world. Its extensive portfolio spans a wide range of equipment and solutions for the water industry, including the transport, treatment, testing, and efficient use of water for public utilities as well as industrial, commercial, and residential customers. Xylem operates three business segments: water infrastructure, applied water, and measurement and control solutions.

We’ve raised our fair value estimate for narrow-moat-rated Xylem to $104 from $97 after the water technology firm posted solid second-quarter results and raised its full-year outlook for the second time this year. The fair value adjustment reflects the acquisition of Evoqua, our more optimistic near-term revenue growth projections, and time value of money.

Xylem is one of the leading water technology companies in the world. Its extensive portfolio spans a wide range of equipment and solutions for the water industry, including the transport, treatment, testing, and efficient use of water for public utilities as well as industrial, commercial, and residential customers. Xylem operates three business segments: water infrastructure, applied water, and measurement and control solutions.

After reviewing our assumptions for Xylem following the completion of its acquisition of Evoqua, we reiterate our narrow moat rating and $97 fair value estimate but downgrade our moat trend rating to stable from positive. We see the name as fairly valued, with the stock currently trading in 3-star territory.

Xylem is one of the leading water technology companies in the world. Its extensive portfolio spans a wide range of equipment and solutions for the water industry, including the transport, treatment, testing, and efficient use of water for public utilities as well as industrial, commercial, and residential customers. Xylem operates three business segments: water infrastructure, applied water, and measurement and control solutions.

Narrow-moat-rated Xylem reported strong first-quarter results, featuring a 53% year-over-year increase in adjusted EPS, from $0.47 to $0.72, driven by robust demand across all segments as well as improvement in chip supply. We’ve increased our fair value estimate to $97 from $95, which reflects our slightly more optimistic near-term revenue growth projections as well as time value of money.

Xylem is one of the leading water technology companies in the world. Its extensive portfolio spans a wide range of equipment and solutions for the water industry, including the transport, treatment, testing, and efficient use of water for public utilities as well as industrial, commercial, and residential customers. Xylem operates three business segments: water infrastructure, applied water, and measurement and control solutions.

Narrow-moat Xylem finished 2022 with a strong fourth quarter, as its full-year revenue of $5,522 million and adjusted EPS of $2.85 came in above our expectations ($5,416 million and $2.69, respectively). We’ve made some puts and takes in our model, but we are leaving our $95 fair value estimate unchanged as nothing in the earnings release materially alters our long-term outlook for the water technology firm.

Xylem is one of the leading water technology companies in the world. Its extensive portfolio spans a wide range of equipment and solutions for the water industry, including the transport, treatment, testing, and efficient use of water for public utilities as well as industrial, commercial, and residential customers. Xylem operates three business segments: water infrastructure, applied water, and measurement and control solutions.

Xylem is one of the leading water technology companies in the world. Its extensive portfolio spans a wide range of equipment and solutions for the water industry, including the transport, treatment, testing, and efficient use of water for public utilities as well as industrial, commercial, and residential customers. Xylem operates three business segments: water infrastructure, applied water, and measurement and control solutions.

We expect to lower our $100 fair value estimate for narrow moat-rated Xylem by a mid-single-digit percentage after the water technology firm announced its intention to acquire Evoqua in an all-stock transaction valued at roughly $7.5 billion. While we believe the deal is strategically sound, given the complementary fit of the two firms' portfolios, our fair value reduction reflects the hefty price tag. Xylem's stock closed down nearly 8% following the announcement, which we think reflects investors' concerns about the purchase price, which implies a multiple of around 23 times forward EBITDA.

We’ve raised our fair value estimate for narrow-moat-rated Xylem to $100 from $98 after the company posted solid third-quarter results, featuring a roughly 25% year-over-year increase in adjusted EPS, from $0.63 to $0.79. The fair value increase reflects our slightly more optimistic near-term revenue growth and operating margin projections as well as time value of money. We see the name as appropriately valued at current levels, with shares trading in 3-star territory.

Xylem is one of the leading water technology companies in the world. Its extensive portfolio spans a wide range of equipment and solutions for the water industry, including the transport, treatment, testing, and efficient use of water for public utilities as well as industrial, commercial, and residential customers. Xylem operates three business segments: water infrastructure, applied water, and measurement and control solutions.