Xylem Inc.

Xylem has a $4.6 billion backlog, and the 18-month target still only lands at $155.

If you own Xylem, you own a water business with solid demand and a stock already priced like good news is normal.

xyl

industrials · water technology large cap updated jan 2, 2026
$139.11
market cap ~$34B · 52-week range $100–$154
xvary composite: 76 / 100 · average
our overall rating — combines growth, value, risk, and momentum
Start here if you're new
what it is
Xylem sells the pumps, meters, treatment gear, and service contracts that move water from collection to distribution.
how it gets paid
Last year Xylem made $9.0B in revenue. Water Infrastructure was the main engine at $2.78B, or 31% of sales.
why it's growing
Revenue grew 5.5% last year. The key number was 38.3% gross margin because margin held up while revenue grew.
what just happened
Xylem posted Q4 2025 EPS of $1.42, ahead of the $1.39 estimate.
At a glance
A balance sheet — strong enough to weather a downturn
80/100 earnings predictability — you can trust these numbers
27.5x trailing p/e — priced about right
1.2% dividend yield — cash in your pocket every quarter
12.0% return on capital — nothing to write home about
xvary composite: 76/100 — average
What they do
Xylem sells the pumps, meters, treatment gear, and service contracts that move water from collection to distribution.
Water systems are sticky because cities and utilities do not swap out pumps, meters, and treatment gear like phone apps. Xylem's $4.6 billion backlog equals about 51% of its $9.0 billion annual revenue, which tells you customers keep lining up. The company covers the full water cycle, so once your system runs on its equipment and service network, switching gets expensive and annoying.
water-tech large-cap industrial-tech infrastructure smart-metering
How they make money
$9.0B annual revenue · their business grew +5.5% last year
Water Infrastructure
$2.78B
2.6%
Applied Water
$2.02B
+1.2%
Measurement & Control
$2.20B
+10.5%
Water Solutions & Services
$2.00B
+11.2%
The products that matter
pumps and treatment equipment
Water infrastructure equipment
$9.0B revenue base · core disclosed business
this is the disclosed $9.0B operating base. if you strip away the labels, this is still the center of gravity.
core
maintenance and service support
Services and solutions
revenue not separately disclosed
management frames this as recurring support on top of the installed base, but this snapshot does not provide a separate revenue figure inside the $9.0B total.
recurring layer
monitoring and software tools
Smart water technology
positioned inside a $9.0B platform
this is the digital efficiency angle on top of a $9.0B water business. the idea is clear. the standalone sales contribution is not.
data layer
Key numbers
$4.6B
order backlog
Backlog → plain English: signed work waiting to be delivered → so what: it covers about 51% of annual revenue and gives demand visibility.
27.5x
trailing p/e
P/E → plain English: how much investors pay for each dollar of earnings → so what: you are paying a premium for a company with 5.0% projected sales growth.
13.5%
operating margin
Operating margin → plain English: profit before interest and taxes on each sales dollar → so what: it is solid, but not high enough to hide execution mistakes.
12.0%
return on capital
Return on capital → plain English: profit generated from money invested in the business → so what: decent quality, but not absurdly efficient.
Financial health
A
strength
  • balance sheet grade A — very strong financial position
  • risk rank 3 — safer than 50% of stocks
  • price stability 75 / 100
  • long-term debt $1.9B (5% of capital)
  • net profit margin 15.8% — keeps 16 cents of every dollar in revenue
  • return on equity 14% — $0.14 profit for every $1 investors have put in
A — among the top-rated companies for balance sheet quality.
Total return vs. market

You invested $10,000 in XYL 3 years ago → it's now worth $13,130.

The index would have given you $13,920.

same period. same starting point. XYL trailed the market by $790.

source: institutional data · total return
What just happened
beat estimates
Xylem posted Q4 2025 EPS of $1.42, ahead of the $1.39 estimate.
Revenue reached $2.174 billion in Q4 2025, up from $2.087 billion a year earlier. Gross margin was 38.3%, and management lifted 2025 and 2026 top-line expectations by $75 million.
$2.17B
revenue
$1.42
eps
38.3%
gross margin
the number that mattered
The key number was 38.3% gross margin because margin held up while revenue grew, which is how a water equipment company turns steady demand into faster earnings.
source: company earnings report, 2026

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What could go wrong

the #1 risk is tariff exposure on roughly 20% of the business.

∘
med
tariffs on imported components and equipment
management has flagged exposure on roughly 20% of the business. that is not theoretical. it is a direct path from trade policy to cost pressure.
if xylem cannot offset those costs with pricing, margins get squeezed on a $9.0B revenue base.
∘
med
project delays in municipal and infrastructure work
large water projects rarely move in a straight line. the company itself flagged macro-related delays as a risk to results.
on a $9.0B annual revenue base, even a 1% timing slip is about $90M moving to a later period.
∘
med
margin pressure if productivity gains fade
the recent quarter posted a 10.0% net margin versus a 14.8% full-year net margin. that gap tells you the business still needs execution discipline.
at 27.5x trailing earnings, the stock does not give you much room for a multi-quarter margin wobble.
tariffs touch roughly 20% of the business, and the latest quarter's 10.0% net margin shows there is not infinite room to absorb shocks.
source: institutional data · regulatory filings · risk analysis
Pay attention to
metric
whether growth stays above the current 5.5%
a premium multiple is easier to defend if a $9.0B business keeps compounding faster than inflation.
trend
quarterly margin versus the 14.8% full-year level
the last quarter ran at 10.0%. if that becomes the norm, the multiple should not stay where it is.
calendar
estimate revisions after the next earnings print
analysts already added $75M to revenue for 2025 and 2026, plus $0.25 and $0.30 to EPS. watch if that trend holds.
risk
tariff exposure on roughly 20% of the business
if cost inflation hits faster than pricing, a stable water story starts looking less stable.
Analyst rankings
short-term outlook
top 20%
momentum score 2 — in human-speak, analysts think XYL has better 12-month odds than most stocks.
risk profile
average
stability score 3 — this is not reckless, but it is not a pure defensive bunker either.
chart momentum
top 5%
technical score 1 — the chart is stronger than almost everything else in the coverage universe.
earnings predictability
80 / 100
management usually lands near the number. fewer surprises means valuation does more of the talking.
source: institutional data
Institutional activity

institutions have been net buying for 3 consecutive quarters — 517 buyers vs. 436 sellers in 3q2025. total institutional holdings: 0.2B shares. net buying for 3 quarters.

source: institutional data · 1q2025-3q2025
source: institutional data
Price targets
3-5 year target range
$113 $196
$139 current price
$155 target midpoint · +11% from current · 3-5yr high: $265 (+90% · 18% ann'l return)
source: institutional data · analyst targets

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