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Morningstar’s Analysis

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Economic Moat


Capital Allocation


We Think Digital Water Solutions Will Help Widen Xylem's Moat

Analyst Note

| Krzysztof Smalec, CFA |

Narrow-moat-rated Xylem hosted an investor day Sept. 30 to discuss its long-term growth strategy. We maintain our $98 fair value estimate and reiterate our positive moat trend rating as we believe that the water technology firm is poised to outgrow its end markets thanks to its strategy centered on digital water solutions. We've made some puts and takes in our model, but our slightly more optimistic long-term revenue growth assumptions and time value of money were offset by more conservative estimates for 2021 due to supply chain disruptions.

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Company Profile

Business Description

Xylem is a global leader in water technology and offers a wide range of solutions, including the transport, treatment, testing, and efficient use of water for customers in the utility, industrial, commercial, and residential sectors. Xylem was spun off from ITT in 2011. Based in Rye Brook, New York, Xylem has a presence in over 150 countries and employs 16,200. The company generated $4.9 billion in revenue and $525 million in adjusted operating income in 2020.

1 International Drive
Rye Brook, NY, 10573
T +1 914 323-5700
Sector Industrials
Industry Specialty Industrial Machinery
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 16,700