XYL
Xylem Inc.
$101.95
Stable Earnings Power
65%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 38.0% above fair value
You pay
$101.95
Bear
$59.10
Fair
$73.88
Bull
$88.65
Bear
$59.10
-42.0%
$3.92 × 15x P/E
Fair
$73.88
-27.5%
$3.92 × 19x P/E
Bull
$88.65
-13.0%
$3.92 × 23x P/E
Adjust Assumptions
18.8x
3.92$
Key Value Driver
Normalized P/E multiple (19x base case)
Implied Market Multiple
26.0x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (40 analysts)
$146.63
Divergence from AlphaVal
50%
Summary
Applying a 19x P/E to adjusted EPS of $3.92, the base-case value is $73.88 per share. DDM cross-check: $329.35.
Warnings
Dividend-based valuation: $329.35 (above our primary estimate by 346%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $146.63 (from 40 analysts). Our estimate is 50% 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