Xylem Inc. (XYL)
Quantitative Summary
DeterministicAt 27.2x earnings — a 39% discount to the sector average of 44.7x — XYL is in the lower valuation range. Financial health is average: Piotroski 6/9, Altman Z 4.3. DCF fair value of $98 implies 24% downside based on model assumptions.
Generated deterministically from quant metrics and financial statements. Not a recommendation.
Algorithmic Teardown
AI-GeneratedThe fundamental economics of Xylem Inc. reveal a capital allocation challenge where the return on invested capital at 6.5% falls significantly short of the cost of equity, creating a negative spread that erodes long-term shareholder value despite an ROE of 8.2%. This profitability is primarily driven by robust net margins of 10.6% and strong gross margins near 39%, rather than asset efficiency or financial leverage, as indicated by the DuPont decomposition showing low turnover at 0.51x and moderate equity multipliers around 1.5x. While qualitative risk metrics remain stable with a solid Piotroski F-Score of 6/9, an Altman Z-Score of 4.2 suggesting reasonable solvency, and a negative Beneish M-Score pointing to low earnings manipulation risk, the underlying capital destruction persists.
Valuation multiples reflect this operational disconnect; trading at roughly 31 times forward earnings, the stock commands a substantial premium relative to its Industrials sector average of 44.2x, yet remains below historical norms if implied growth rates are not met. The market appears to price in aggressive future performance, assuming a ten-year free cash flow compound annual growth rate of nearly 18%, which starkly contrasts with the current DCF fair value implying downside risk rather than upside potential. This divergence suggests that current pricing relies heavily on optimistic long-term trajectory assumptions that may not align with the company's present capital efficiency profile.
Risk-adjusted performance metrics further complicate the investment thesis, as the stock exhibits a negative Fama-French Alpha of -13.83% annually and underperforms on momentum factors despite holding value characteristics indicated by its HML tilt. Although insider activity has been neutral over the last ninety days with no significant net flow, the combination of capital destruction relative to WACC and below-average risk-adjusted returns presents a challenging setup for investors seeking efficient growth within the industrial space.
Generated by LLM from quantitative data inputs. May contain inaccuracies. Not investment advice.
DCF Sandbox
Interactive5-year two-stage DCF. Terminal growth 3%. Default sliders match the pre-computed base case. Drag to explore scenarios. Not investment advice.
The growth rate the market implicitly expects over the next 10 years to justify today's price. Compare with historical growth of 6% YoY revenue.
Sensitivity Matrix
| TG ↓ / WACC → | 9.7% | 11.7% | 13.7% |
|---|---|---|---|
| 2% | $116 | $90 | $73 |
| 3% | $130 | $98 | $78 |
| 4% | $149 | $108 | $84 |
Center = base case. Green = >10% upside, Red = >10% downside vs $110.29.
Pre-computed DCF: WACC=11.7%, terminal growth 3%. Fair value $98 (-24.0%). Not investment advice.
Valuation Context
Currently trading 1% above its 5-year average P/E of 32.3x.
Price Chart with Moving Averages
Technical Setup
AI GeneratedXYL is currently trading below both its 50-day and 200-day simple moving averages, indicating a downtrend in the short to medium term, while the Relative Strength Index (RSI) at 33.7 suggests that the stock might be oversold on a near-term basis.
Quant Health Deep Dive
Profitability & Value Creation
✅ Conservative payout — room for dividend increases.
DuPont Analysis — ROE Decomposition
Breaking down Return on Equity to see how the company generates its ROE — efficiency, margins, or leverage.
Balance Sheet Health
Earnings Surprise History
EPS estimates vs actuals for the most recent reported quarters. Source: yfinance.
Dividend History
| Date | Amount | Change |
|---|---|---|
| 2026-05-28 | $0.4300 | 0.0% |
| 2026-02-24 | $0.4300 | +7.5% |
| 2025-11-25 | $0.4000 | 0.0% |
| 2025-08-28 | $0.4000 | 0.0% |
| 2025-05-29 | $0.4000 | 0.0% |
| 2025-02-18 | $0.4000 | +11.1% |
| 2024-11-26 | $0.3600 | 0.0% |
| 2024-08-29 | $0.3600 | 0.0% |
| 2024-05-30 | $0.3600 | 0.0% |
| 2024-02-20 | $0.3600 | +9.1% |
| 2023-11-20 | $0.3300 | 0.0% |
| 2023-08-30 | $0.3300 | 0.0% |
Dividend and split data from SEC filings and market data. Amounts are per share, not adjusted for splits. Source: yfinance.
Risk Profile
Sharpe = risk-adjusted return (higher is better). Max drawdown = largest peak-to-trough decline. 1,200+ trading days.
Underwater (Drawdown from Peak)
How far below the all-time high the price has been over time. Deeper = more pain for holders.
Rolling 60-Day Beta vs S&P 500 (VOO)
How the stock's sensitivity to market moves changes over time. β > 1 = more volatile than the market.
Fama-French 5-Factor Exposure
Academic factor model decomposition — what's really driving this stock's returns.
Fama-French 5-Factor Model. Data: Kenneth French Data Library. Regression over 3 years of daily returns.
Fundamentals
Passive Flow Attribution
ETF Draft EffectWhen investors buy or sell ETFs like VOT or XLI, the fund manager is mechanically forced to buy or sell XYL shares regardless of Xylem Inc.'s individual fundamentals. We estimate $4.2B of passive capital is structurally linked to XYL through 8 tracked ETFs. Index rebalances and ETF creation/redemption cycles can create noticeable volume spikes unrelated to company news.
Passive exposure = Σ (ETF AUM × stock weight in ETF) across 8 tracked ETFs. Actual passive ownership is larger (includes mutual funds). Not investment advice.
ETF Contagion Visualizer
Simulate a price drop in Xylem Inc. to visualize passive redemption contagion across ETFs and collateral stocks.
If Xylem Inc. (XYL) experiences a significant drawdown, ETF redemptions can create collateral selling pressure on co-held stocks. Our model identifies CATERPILLAR INC (CAT) as the most exposed collateral stock, sharing 1 ETFs with XYL. This is the "Passive Contagion" effect described in the Inelastic Market Hypothesis.
Contagion model based on shared ETF exposure and constituent weights across 28 tracked ETFs. Estimated selling pressure is a simplified model — actual impact depends on market liquidity, ETF redemption mechanics, and market-maker activity.
XYL Ownership Dynamics
Passive funds hold 1 in every 6 XYL shares, reducing daily market volatility.
Xylem Inc. (XYL) exerts notable gravity on the passive index market, currently representing 0.7% of the VOT (VOT) and 0.5% of the State Street Industrial Select Sector SPDR ETF (XLI). Across 28 tracked ETFs, approximately 37M shares (15.6% of float) are held by passive funds and rarely trade on the open market. This level of passive ownership means index rebalances can create outsized volume events.
ETFs with Highest XYL Exposure
Float lock-up computed from 28 ETFs tracked by SecuritiesDB. Actual passive ownership is higher (includes mutual funds, pension funds, etc.).
XYL Institutional Volume Profile
252-day volume distribution by price level. The Point of Control (POC) marks — the price where the most institutional volume transacted — an implicit support/resistance floor.
The highest-volume price zone for Xylem Inc. over the past year sits near $140.13 (15% of 252-day volume). The current price of $110.29 sits 21.3% below the POC — suggesting potential mean-reversion upside if institutional demand reasserts at this level. The highly concentrated volume profile (15% at POC) indicates strong consensus on fair value — institutional participants have repeatedly transacted near this price.
Volume Profile computed from 252 trading days of OHLCV data. Volume allocated to price bins proportionally based on daily high-low range. Not investment advice.
XYL Capital Efficiency
How efficiently does Xylem Inc. convert operating profits into free cash? The FCF Conversion ratio measures the gap between accounting earnings and real cash generation.
Xylem Inc. converts 51% of its EBITDA into free cash flow, a healthy conversion rate indicating efficient capital management — the business generates substantial cash after reinvestment. However, the ROIC-WACC spread is negative (-5.2%), suggesting reinvested capital is destroying shareholder value.
Capital efficiency = Free Cash Flow ÷ EBITDA. Reinvestment = (EBITDA − FCF) ÷ EBITDA. Metrics from latest annual filings. Not investment advice.
Fails-to-Deliver (FTD) History
SEC-reported settlement failures. Elevated FTDs can indicate high short-selling pressure, operational settlement issues, or naked shorting activity.
| Date | Failed Shares | Close Price | Notional Value |
|---|---|---|---|
| 2026-05-11 | 1,647 | $113.73 | $187,313.31 |
| 2026-05-04 | 1 | $115.37 | $115.37 |
| 2026-04-30 | 293 | $115.40 | $33,812.2 |
| 2026-04-28 | 1,315 | $123.51 | $162,415.65 |
| 2026-04-27 | 18,535 | $121.46 | $2.3M |
| 2026-04-24 | 73 | $121.69 | $8,883.37 |
| 2026-04-23 | 690 | $121.46 | $83,807.4 |
| 2026-04-21 | 593 | $120.46 | $71,432.78 |
| 2026-04-15 | 165 | $129.66 | $21,393.9 |
| 2026-04-10 | 8,416 | $129.40 | $1.1M |
| 2026-04-08 | 1,790 | $124.27 | $222,443.3 |
| 2026-04-06 | 29,799 | $121.26 | $3.6M |
| 2026-03-27 | 61 | $119.49 | $7,288.89 |
| 2026-03-25 | 25 | $120.45 | $3,011.25 |
| 2026-03-13 | 46,238 | $120.02 | $5.5M |
| 2026-03-09 | 2,403 | $123.15 | $295,929.45 |
| 2026-03-04 | 207 | $127.18 | $26,326.26 |
| 2026-02-18 | 20,544 | $128.18 | $2.6M |
| 2026-02-11 | 35,828 | $128.92 | $4.6M |
| 2026-02-03 | 9,741 | $139.88 | $1.4M |
| 2026-01-20 | 280 | $146.13 | $40,916.4 |
| 2025-11-26 | 818 | $141.51 | $115,755.18 |
| 2025-11-25 | 93,222 | $141.83 | $13.2M |
| 2025-11-24 | 9 | $140.39 | $1,263.51 |
| 2025-11-17 | 10,304 | $142.73 | $1.5M |
| 2025-11-13 | 8,531 | $149.87 | $1.3M |
| 2025-11-12 | 2,704 | $149.78 | $405,005.12 |
| 2025-10-30 | 493 | $152.95 | $75,404.35 |
| 2025-10-29 | 1,305 | $150.50 | $196,402.5 |
| 2025-10-28 | 8,574 | $149.40 | $1.3M |
Source: SEC Regulation SHO FTD data. Data is reported with a ~30 day delay. High FTD quantities relative to average daily volume may indicate settlement stress.
Price Correlations
Statistical correlation of daily returns with other stocks. High correlations indicate stocks that move together; negative correlations can offer diversification.
| Peer | 252-Day (1Y) | 126-Day (6M) | Direction |
|---|---|---|---|
| WTGXX | NaN | NaN | |
| AME | 0.563 | 0.433 | Moderate |
| AMP | 0.529 | 0.583 | Moderate |
| IR | 0.519 | 0.575 | Moderate |
| EMR | 0.510 | 0.503 | Moderate |
| WAB | 0.501 | 0.516 | Moderate |
| RJF | 0.485 | 0.575 | Moderate |
| CMI | 0.480 | 0.474 | Moderate |
| PH | 0.478 | 0.454 | Moderate |
| EWBC | 0.477 | 0.500 | Moderate |
Pearson correlation of daily log returns. 252d ≈ 1 trading year. Computed from price history. Not investment advice.
Compare XYL to Peers
Quant metrics computed deterministically from financial statements and price data. Updated: 2026-06-02.
SecuritiesDB provides programmatic data aggregation for informational purposes only. None of the metrics, summaries, or algorithmic flags constitute a recommendation to buy or sell any security.