XYL US S&P 500Russell 1000 Earnings call · transcribed from the recording
Xylem Inc. (XYL) · Q3 2026 results and valuation
Share price: $95.11 · 2026-11-11
Results Q3 2026 vs Q2 2026 · previous quarter · published 27 Oct 2026 and 28 Jul 2026
Net income up 10.6% on the previous quarter, guidance cut. Management sounded about as positive as a typical company call, in its script and in answers to analysts.
Only a basic analysis is available for this company at the moment.
1 · Numbers
+10.6%
Net income vs Q2 2026
Guidance cut
Net income 291.0M vs 263.0M
Revenue −5.8%
Against the same quarter last year (Q3 2025) it is +28.2%, so it is not just seasonal.
2 · How management spoke
Typical
More upbeat than 55% of company calls
Answers to analysts: upbeat, in line with the script.
Similar to last call.
3 · What stood out
Key theme
Year-to-date free cash flow was $444 million, slightly below last year, mainly because of working capital and investments in outsourced water…
Valuation
Is Xylem Inc. undervalued?
Reverse DCF. Free cash flow from the last full fiscal year (2025-12-31), grown for 10 years, discounted back, plus a terminal value. “Implied growth” is the rate the current price assumes.
At 17.8% growth a year (3-year revenue growth), the model's fair value is $155.46 a share — the stock trades 39% below it. Today's price assumes 11.6% growth a year.
Current price
$95.11
close of 2026-11-11
Market implies growth of iThe yearly free-cash-flow growth, for the next 10 years, that today’s share price already assumes. If you believe the company grows faster than this, the stock is cheap under this model; slower, and it is expensive.
+11.6% for 10 yrs
Fair value / share
$155.46
Buy below
$116.60
Price vs fair value
Undervalued 39%
Price vs buy-below price
Undervalued 18%
Read between the lines
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Key theme
This morning, Xylem is announcing its intent to divest Applied Water International in specialty flow control, which is its beverage and marine business…
Source quote
“This morning, we're announcing our intent to divest Applied Water International in specialty flow control, which is our beverage and marine business... Today, we're taking another step in focusing Xylem on growth. These actions are rooted in a simple objective, continue applying our 80-20 principles to sharpen Xylem's focus around the businesses and end markets with the...”
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Guidance ↓
With Xylem is lowering its full-year revenue guidance to reflect lower revenue conversion in MCS and WSS.
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Guidance
In WSS, Xylem expects a return to low single-digit growth in the fourth quarter, an improvement from the third quarter, but will lower prior expectations as large project...
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Figure
Xylem's ending backlog grew 13% to $5.5 billion versus prior year, sequentially up roughly $200 million, and its book-to-bill for the quarter...
Tone
How upbeat the language was, compared with other companiesiTone counts positive minus negative finance words, adjusted for length. Executives mostly speak positively, so the labels compare each call with every company's latest call: “typical” is the middle third, “very upbeat” the top tenth, “cautious” the bottom tenth.. Dot: Q3 2026. Ring: Q2 2026.
Script and answers carried a similar tone, so the script's message held up under questioning.
Sentences that drove the tone
“Our exposure to higher growth end markets continues to increase, and the actions we're announcing today position Xylem to accelerate organic growth while creating additional opportunities for margin expansion and...”
“Together, these actions reflect our determination to proactively advance our transformation plan and position Zylam to accelerate growth while continuing to expand margins over time.”
“In applied water, orders grew 15% and book-to-bill was above 1, lifted by data center wins and strength in America's commercial business.”
Full figures
USD · SEC EDGAR XBRL (10-Q, period end 2026-09-30)
| Metric | Q3 2026period end 2026-09-30 | Q2 2026period end 2026-06-30 | Change | Q3 2025 | YoY |
|---|---|---|---|---|---|
| Revenue | 2.20B | 2.34B | −5.8% | 2.27B | −3.0% |
| Gross profit | 907.0M | 963.0M | −5.8% | 883.0M | +2.7% |
| Operating income | 385.0M | 390.0M | −1.3% | 334.0M | +15.3% |
| Net income | 291.0M | 263.0M | +10.6% | 227.0M | +28.2% |
| EPS | 1.25 | 1.11 | +12.6% | 0.93 | +34.4% |
| P/E today 24.4 | 28.1 | 29.7 | −1.6 | 33.7 | −5.6 |
Topics
Most discussed now
- New At the same time, Xylem is a fundamentally stronger company than it was just a few short years ago.
- Near-term conditions were more challenging with revenue coming in below Xylem's expectations as certain projects move more slowly than…
- Coming in below Xylem's expectations as certain projects move more slowly than anticipated and utility customer spending decisions took…
- Together, these more than offset continued strength in North America transport and data center execution.
- Xylem strengthens operations, sharpen the portfolio, and build greater resilience across the business.
Faded since Q2 2026
- Dropped Recently won a job in lithium battery So, Xylem secured a win with the world's largest lithium battery cell manufacturer...
- Dropped Xylem definitely have seen a pretty fast pickup in the Vue platform, through its joint venture with Idrica out of...
- Fading At the same time, Xylem has been increasing its exposure to high-growth industrial verticals where its technology, services, and water...
- Fading These trends are creating demand opportunities across the markets Xylem serves and reinforcing the value of the capabilities it has...
Latest announcements
Official filings, newest first.
- Other events · SEC 8-K
- Material agreement; Agreement terminated; New financial obligation · SEC 8-K
- Director or officer change; Regulation FD disclosure · SEC 8-K
- Director or officer change · SEC 8-K
- Results of operations · SEC 8-K
- Material agreement; New financial obligation; Other events · SEC 8-K
- Shareholder vote results · SEC 8-K
- Results of operations · SEC 8-K