Buffett Brain · Research note
Score updated 23 Oct 2026 · analysis from 26 Jul 2026
XYL· Industrials
Xylem
Xylem's low ROIC of 6.7% and below-average margins signal a weak competitive position in the industrial sector.
Buffett fit
Weak fit
Owner
26
Durability
88
Management
66
Price
28
Score updated 23 Oct 2026 · analysis from 26 Jul 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Industrials stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If I owned 100% of Xylem, I'd focus on improving margins and , which currently sit at 6.7% and 13.6%, respectively.
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Xylem's durability appears strong, with consistent profitability over the last five years.
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Xylem's share count has increased by 7.8% over the last five years, indicating potential dilution.
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Xylem's current of 27.0 and yield of 3.54% suggest that the stock is overvalued, lacking the desired 8-10% .
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- The 5-year price target and the return it implies
- What would change the call
- Graham, Lynch and Greenblatt on the same stock
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
5- 1Consistent profitability over the last five years, with net income of $957 million.
- 2TTM revenue of $9.04 billion demonstrates a solid revenue base.
- 3Strong interest coverage ratio of 49.4 indicates financial stability.
- 4Current ratio of 1.46 shows adequate short-term liquidity.
Concerns
5- 1 of 6.7% is significantly below the sector top-quintile cutoff of 13.6%.
- 2 of 38.6% is below the sector top-quintile cutoff of 43.4%.
- 3 of 13.6% is below the sector's top-quintile cutoff of 17.8%.
- 4Share count CAGR of 7.8% indicates potential dilution of shareholder value.
Price history
$109-16.3%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Xylem generates revenue through engineered products and services for water and wastewater applications, with a TTM revenue of $9.04 billion. Its segments include Water Infrastructure, Applied Water, and Measurement & Control Solutions, where it offers a variety of pumps, controls, and smart meters. The business model is service-oriented, with a focus on providing critical infrastructure technologies.
How this analysis has moved
The call has held across 5 reviews.
Sep 27, 2026 → Oct 23, 2026
What other investors would say
The same company, judged by three other documented playbooks.
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