Xylem Inc. (NYSE: XYL)

Sector: Industrials Industry: Specialty Industrial Machinery CIK: 0001524472
Market Cap 23.16 Bn
P/B 7.25
P/E 55.01
P/S 4.43
ROIC (Qtr) 6.60
Div Yield % 1.22
Rev 1y % (Qtr) 7.79
Total Debt (Qtr) 1.96 Bn
Debt/Equity (Qtr) 0.18
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About

Xylem Inc., a prominent player in the water technology industry, is publicly traded on the New York Stock Exchange under the symbol "XYL." The company's operations span the global water sector, providing innovative products, services, and solutions to address the world's pressing water challenges. Xylem's main business activities revolve around four reportable segments: Water Infrastructure, Applied Water, Measurement and Control Solutions, and Integrated Solutions and Services. Each segment caters to unique market applications, serving the needs...

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Investment thesis

Bull case

  • Strong operating cash flow of 1.27B provides robust 0.65x coverage of total debt 1.96B, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 1.19B provide 24.31x coverage of short-term debt 49M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 6.70B provides 3.41x coverage of total debt 1.96B, indicating robust asset backing and low credit risk.
  • Operating cash flow of 1.27B provides exceptional 39.78x coverage of interest expenses 32M, showing strong debt service capability.
  • Operating cash flow of 1.27B provides strong 25.46x coverage of stock compensation 50M, indicating sustainable incentive practices.

Bear case

  • Operating cash flow of 1.27B barely covers its investment activities of (618M), with a coverage ratio of -2.06, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 1.27B provides thin coverage of dividend payments of (380M) with a -3.35 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Investment activities of (618M) provide weak support for R&D spending of 224M, which is -2.76x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 1.19B provide limited coverage of acquisition spending of (290M), which is -4.11x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating earnings of 1.23B show weak coverage of depreciation charges of 574M, with a 2.13 ratio indicating high capital intensity and potential reinvestment needs.

Segments Breakdown of Revenue (2024)

Product and Service Breakdown of Revenue (2024)

Peer comparison

Companies in the Specialty Industrial Machinery
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 GEV GE Vernova Inc. 224.93 Bn 194.57 6.14 0.00 Bn
2 ETN Eaton Corp plc 153.13 Bn 38.99 5.75 11.22 Bn
3 PH Parker-Hannifin Corp 135.87 Bn 165.29 12.09 9.87 Bn
4 EMR Emerson Electric Co 111.68 Bn 47.10 4.65 13.41 Bn
5 ITW Illinois Tool Works Inc 86.68 Bn 28.27 5.40 8.97 Bn
6 CMI Cummins Inc 82.13 Bn 28.89 2.44 7.55 Bn
7 AME Ametek Inc/ 53.79 Bn 36.34 7.27 2.28 Bn
8 ROK Rockwell Automation, Inc 43.80 Bn 44.24 5.11 3.68 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.42 2.28
EV to Cash from Ops. EV/CFO 67.24 37.14
EV to Debt EV to Debt 12.48 34.39
EV to EBIT EV/EBIT 44.34 27.71
EV to EBITDA EV/EBITDA 31.06 25.34
EV to Free Cash Flow [EV/FCF] EV/FCF 166.51 133.36
EV to Market Cap EV to Market Cap 1.06 1.04
EV to Revenue EV/Rev 4.69 39.88
Price to Book Value [P/B] P/B 7.25 6.22
Price to Earnings [P/E] P/E 55.01 143.63
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.49 2.57
Dividend Payout Ratio % Div Payout % (Qtr) 40.10 15.73
Dividend per Basic Share Div per Share (Qtr) 1.56 0.91
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 40.37 82.53
Interest Coverage Int. cover (Qtr) 38.28 12.34
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -6.07 -45.99
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 20.42 118.48
Dividend Growth (1y) % Div 1y % (Qtr) 10.64 10.01
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 11.36 -283.03
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 13.31 -36.87
EBIT Growth (1y) % EBIT 1y % (Qtr) 26.16 -80.72
EBT Growth (1y) % EBT 1y % (Qtr) 29.39 -120.93
EPS Growth (1y) % EPS 1y % (Qtr) 11.46 -39.22
FCF Growth (1y) % FCF 1y % (Qtr) 13.37 85.55
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 9.29 0.87
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.51 0.62
Cash Payout Ratio Cash Payout (Qtr) 0.24 0.10
Cash Ratio Cash Ratio (Qtr) 0.52 3.01
Current Ratio Curr Ratio (Qtr) 1.96 4.97
Debt to Equity Ratio Debt/Equity (Qtr) 0.18 0.38
Interest Cover Ratio Int Coverage (Qtr) 38.28 12.34
Times Interest Earned Times Interest Earned (Qtr) 38.28 12.34
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 20.20 -7,291.27
EBIT Margin % EBIT Margin % (Qtr) 13.77 -7,413.30
EBT Margin % EBT Margin % (Qtr) 13.41 -9,015.79
Gross Margin % Gross Margin % (Qtr) 38.20 -32.61
Net Profit Margin % Net Margin % (Qtr) 10.70 -7,962.06