Opinions
Christine Poole
Xylem Inc.
XYL-N
TOP PICK
Jun 27, 2025
$127.840
Stock price when the opinion was issued
environmental
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PARTIAL BUY
Got ahead of itself. Higher interest rates are a headwind for a richly valued stock. You could start a position here around $85. She likes the water space, a scarce resource, and investors should have a position in it. A pure play, well positioned. Smart metering impacted by chip shortage.
environmental
BUY ON WEAKNESS
Water is a scarce commodity. XYL has a great run-up last year when ESG was popular, so the stock price got ahead of fundamentals. Shares have since pulled back, but you can start adding to this now. She's owned this for four years. The chip shortage is hampering demand, though. Demand for water infrastructure and services will endure.
environmental
DON'T BUY
It's OK. Problem is still trading at 42x earnings, extremely rich. Price to book is 6.2x, which is very high. Price to sales also high. Payout ratio 48%, not a problem. Long-term dividend growth rate is 7%, the historical norm for public companies. Long-term compound 5-year return is 11%. At risk of PE multiple contraction due to increasing rates. He owns AOS and LNN. Yield is 1%.
environmental
BUY ON WEAKNESS
Dominant in water sector. One of the few publicly listed pure plays, so valuation tends to be elevated. Treat, transport, and test water. Clients are utility companies and industrials. Water is a scarce resource. Likes the new acquisition, accretive to earnings in the long run, will expand presence in the space.
environmental
Treats, transports, and tests water (drinking and wastewater). Water is a scarce resource; 70% of the earth is water, but only about 2% is drinkable. Aging infrastructure in developed countries needs to be refurbished. Lots of industries require water. One of the few pure-play, publicly traded water companies, and so it trades at a premium.
(Analysts’ price target is $143.50)International, with 50% of earnings coming from the US. Going through an operating margin improvement program, to refine focus on customers and products that are most lucrative. Yield is 1.24%.