XYL
Xylem Inc.
$110.28
Stable Earnings Power
65%
P/Adj-EPS × Normalized Multiple
Mild
·
Conviction
Overvalued
Trading 2.7% above fair value
You pay
$110.28
Bear
$85.87
Fair
$107.33
Bull
$128.79
Bear
$85.87
-22.1%
$4.69 × 15x P/E
Fair
$107.33
-2.7%
$4.69 × 19x P/E
Bull
$128.79
+16.8%
$4.69 × 23x P/E
Key Value Driver
Normalized P/E multiple (19x base case)
Implied Market Multiple
23.5x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $151.57 from 40 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $107.33 per share.
Warnings
Dividend-based valuation: $313.47 (above our primary estimate by 255%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $151.57 (from 40 analysts). Our estimate is 42% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples