📊 XYL Key Takeaways
Is Xylem Inc. (XYL) a Good Investment?
Xylem presents a fundamental paradox: while its balance sheet is exceptionally strong (debt/equity 0.18x, interest coverage 7.0x), the company exhibits stagnant growth (0.0% revenue YoY) and critically low free cash generation ($18M or 0.8% FCF margin). The severe disconnect between $244M operating income and only $18M free cash flow, combined with historically depressed returns (ROE 1.8%, ROA 1.1%), suggests structural capital efficiency issues that outweigh balance sheet strength.
Xylem shows solid fundamental quality with healthy margins, strong free cash flow generation, and a conservative balance sheet with low leverage and strong interest coverage. The main limitation is muted top-line growth, with revenue essentially flat and only modest net income expansion, which suggests a fundamentally sound business but not one currently showing strong growth acceleration.
Xylem Inc. Key Strengths (XYL)
- Conservative capital structure with 0.18x debt/equity ratio and 7.0x interest coverage provide substantial financial flexibility and resilience
- Reasonable gross margin of 37.8% and operating margin of 11.5% demonstrate core operational competence in production and pricing
- Profitable and operationally sound with $244M operating income, reducing immediate financial distress risk
- Strong profitability profile with 38.5% gross margin, 13.5% operating margin, and 10.6% net margin
- Excellent financial health driven by low debt-to-equity of 0.17x, current ratio of 1.62x, and interest coverage of 34.9x
- High-quality cash generation with $910M free cash flow and a 10.1% free cash flow margin
XYL Stock Risks: Xylem Inc. Investment Risks
- Flat revenue growth (0.0% YoY) and minimal net income growth (0.7% YoY) indicate a mature, stagnant business with no visible expansion
- Critically low free cash flow of $18M on $244M operating income (0.8% FCF margin) suggests structural issues in working capital management or excessive capex preventing cash conversion
- Severely depressed returns—ROE 1.8% and ROA 1.1%—reveal poor capital allocation and inadequate returns on shareholders' invested capital
- Revenue growth is currently flat, limiting operating leverage and earnings upside
- Return metrics are respectable but not exceptional, with ROE of 8.3% and ROA of 5.4%
- Net income growth remains modest, raising the risk of slower fundamental momentum if demand softens
Key Metrics to Watch
- Free cash flow composition and trend—must clarify whether low FCF is capex-driven, working capital-constrained, or structurally declining
- Revenue growth inflection—any sustainable return to positive growth would validate business resilience; currently showing none
- Return on equity trajectory—1.8% is unsustainably low and must improve meaningfully to justify $11B equity base
- Revenue growth and order conversion trends
- Free cash flow margin and operating margin sustainability
Xylem Inc. (XYL) Financial Metrics & Key Ratios
💡 AI Analyst Insight
The relatively thin 0.8% FCF margin may limit capital allocation flexibility.
XYL Profit Margin, ROE & Profitability Analysis
XYL vs Industrial Sector: How Xylem Inc. Compares
How Xylem Inc. compares to Industrial sector averages
Sector benchmarks are approximate industry averages. Actual sector performance may vary.
Is Xylem Inc. Stock Overvalued? XYL Valuation Analysis 2026
Based on fundamental analysis, Xylem Inc. has mixed fundamental signals relative to the Industrial sector in 2026.
Note: This is a fundamental analysis based on SEC filings. For P/E ratio, price targets, and market-based valuation, consult financial data providers. This is not investment advice.
Xylem Inc. Balance Sheet: XYL Debt, Cash & Liquidity
XYL Revenue & Earnings Growth: 5-Year Financial Trend
5-Year Trend Summary: Xylem Inc.'s revenue has grown significantly by 23% over the 5-year period, indicating strong business expansion. The most recent EPS of $2.79 reflects profitable operations.
XYL Revenue Growth, EPS Growth & YoY Performance
XYL Quarterly Earnings & Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q1 2026 | $2.1B | $169.0M | $0.69 |
| Q3 2025 | $2.1B | $153.0M | $0.89 |
| Q2 2025 | $2.2B | $153.0M | $0.80 |
| Q1 2025 | $2.0B | $153.0M | $0.63 |
| Q3 2024 | $2.1B | $152.0M | $0.63 |
| Q2 2024 | $1.7B | $92.0M | $0.45 |
| Q1 2024 | $1.4B | $99.0M | $0.54 |
| Q3 2023 | $1.4B | $12.0M | $0.07 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
Xylem Inc. Dividends, Buybacks & Capital Allocation
XYL SEC Filings: Latest 10-K & 10-Q Analysis
Access official SEC EDGAR filings for Xylem Inc. (CIK: 0001524472)
📋 Recent SEC Filings
❓ Frequently Asked Questions about XYL
What is the AI rating for XYL?
Xylem Inc. (XYL) has a Combined AI Grade of B from Claude (B) and ChatGPT (B) with 74% combined confidence, based on fundamental analysis of SEC EDGAR filings.
What are XYL's key strengths?
Claude: Conservative capital structure with 0.18x debt/equity ratio and 7.0x interest coverage provide substantial financial flexibility and resilience. Reasonable gross margin of 37.8% and operating margin of 11.5% demonstrate core operational competence in production and pricing. ChatGPT: Strong profitability profile with 38.5% gross margin, 13.5% operating margin, and 10.6% net margin. Excellent financial health driven by low debt-to-equity of 0.17x, current ratio of 1.62x, and interest coverage of 34.9x.
What are the risks of investing in XYL?
Claude: Flat revenue growth (0.0% YoY) and minimal net income growth (0.7% YoY) indicate a mature, stagnant business with no visible expansion. Critically low free cash flow of $18M on $244M operating income (0.8% FCF margin) suggests structural issues in working capital management or excessive capex preventing cash conversion. ChatGPT: Revenue growth is currently flat, limiting operating leverage and earnings upside. Return metrics are respectable but not exceptional, with ROE of 8.3% and ROA of 5.4%.
What is XYL's revenue and growth?
Xylem Inc. reported revenue of $2.1B.
Does XYL pay dividends?
Xylem Inc. pays dividends, with $106.0M distributed to shareholders in the trailing twelve months.
Where can I find XYL SEC filings?
Official SEC filings for Xylem Inc. (CIK: 0001524472) including 10-K, 10-Q, and 8-K reports are available on SEC EDGAR.
What is XYL's EPS?
Xylem Inc. has a diluted EPS of $0.79.
How is the AI analysis conducted?
Two independent AI systems — Claude (Anthropic) and ChatGPT (OpenAI) — analyze SEC EDGAR filings including 10-K annual reports and 10-Q quarterly reports. Each AI evaluates financial health, profitability ratios, balance sheet strength, and growth metrics. The combined grade reflects both perspectives for balanced insights.
What is XYL's fundamental grade?
Based on our AI fundamental analysis in June 2026, Xylem Inc. has a B grade with 74% confidence. Review the strengths and risks sections above for full context. This is not investment advice.
Is XYL stock overvalued or undervalued?
Valuation metrics for XYL: ROE of 1.8% (sector avg: 15%), net margin of 9.1% (sector avg: 10%). Compare these metrics with sector averages to assess valuation.
What is XYL's AI grade for 2026?
Our dual AI analysis gives Xylem Inc. a combined B grade for 2026. Revenue is data pending, with profitability at or below sector average. Always conduct your own research.
What is XYL's free cash flow?
Xylem Inc.'s operating cash flow is $108.0M, with capital expenditures of $90.0M. FCF margin is 0.8%.
How does XYL compare to other Industrial stocks?
Vs Industrial sector averages: Net margin 9.1% (avg: 10%), ROE 1.8% (avg: 15%), current ratio 1.46 (avg: 1.8).