Xylem Inc

XYL: XNYS (USA)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	$451.00	Hncrs	Jrtgjbbg

Xylem Earnings: Strong Revenue Growth and Margin Expansion in Measurement and Control Solutions

Krzysztof Smalec

Jul 30, 2024

Narrow-moat-rated Xylem posted solid second-quarter results, with an 11% year-over-year increase in adjusted EPS. After a strong first half, Xylem raised its full-year guidance and now expects organic revenue growth of 5% to 6% (up from 4% to 6% previously) and adjusted EPS of $4.18 to $4.28 (up from $4.10 to $4.25 previously). While nothing in the earnings release materially alters our long-term thesis, we’ve slightly increased our fair value estimate to $114 per share from $112 due to time value of money. We see shares as modestly overvalued at current levels, and we’d prefer to wait for a more attractive entry point.

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