On 12 Nov 2026 our base value for Xylem Inc. is $43.21 a share, 54.0% below its $94.03 close; 0 of 1 valuation methods put it above the price.
| Method | Value | vs price | Basis |
|---|---|---|---|
| Discounted cash flow | $43.21 | -54.0% | free cash flow $921.00m, growth -3% for 5 years, then fading to 3% over 5 more, discounted at 9.59%; stress floor $36.81 |
| Exit multiple (P/E) | — | — | no exit multiple: the five-year median of 31.4x is 1.8x the 17.3x this name trades at today (limit 1.5x) — the market has re-rated the name, so its own history prices a business it is no longer paid for. The forward PE is not a substitute: it is today's price divided by earnings, and an anchor built from it can only restate the price |
| Sum of the parts | — | — | no sum of the parts: this run holds no segment disclosure for the name |
| Price to sales | — | — | not reached: the cash-flow or earnings methods produced an anchor, so this fallback was not run |
| Tangible book | — | — | used only for lenders, where book value is the business |
| Price to FFO (REITs) | — | — | used only for REITs |
Each working is rebuilt by code from the valuation's own figures and checked against the published value.
The discount rate:
| Risk-free rate | 5.13% (10-year US Treasury yield) |
| Company's own beta | 1.00 (5 years of monthly returns against the S&P 500; standard error 0.17) |
| Peer beta | 0.98 (median of 13 S&P 500 Industrial Machinery & Supplies & Components companies) |
| Blend of own and peers | 0.99 (36% own, 64% peers, weighted by how precisely the company's own beta is measured) |
| Adjusted beta | 0.99 (0.67 × 0.99 + 0.33, pulled toward the market's 1.0) |
| Equity risk premium | 4.5% |
| Discount rate = risk-free + adjusted beta × premium | 9.59% |
Free cash flow grows -3.00% a year for 5 years, then fades in equal steps toward 3% over 5 more; each year is discounted by 1 ÷ (1 + rate)^year:
| Year | Growth | Free cash flow | Discount factor | Present value |
|---|---|---|---|---|
| Now | — | $921.00m | — | — |
| Year 1 | -3.00% | $893.37m | 0.9125 | $815.23m |
| Year 2 | -3.00% | $866.57m | 0.8327 | $721.61m |
| Year 3 | -3.00% | $840.57m | 0.7599 | $638.74m |
| Year 4 | -3.00% | $815.35m | 0.6934 | $565.38m |
| Year 5 | -3.00% | $790.89m | 0.6328 | $500.45m |
| Year 6 | -2.00% | $775.08m | 0.5774 | $447.55m |
| Year 7 | -1.00% | $767.33m | 0.5269 | $404.32m |
| Year 8 | 0.00% | $767.33m | 0.4808 | $368.95m |
| Year 9 | 1.00% | $775.00m | 0.4388 | $340.05m |
| Year 10 | 2.00% | $790.50m | 0.4004 | $316.51m |
| Terminal value = year-10 cash flow × (1 + 3%) ÷ (9.59% − 3%) | $12.36bn |
| Terminal value in today's money | $4.95bn |
| Present value of years 1–10 | $5.12bn |
| Total present value | $10.07bn |
| Shares outstanding | 233.04m |
| Value per share = total ÷ shares | $43.21 |
How the DCF value moves with the discount rate and the starting growth (the middle cell is the published value):
| Discount rate | Growth -8% | Growth -3% | Growth 2% |
|---|---|---|---|
| 8.59% | $36.96 | $50.38 | $68.55 |
| 9.59% | $32.05 | $43.21 | $58.24 |
| 10.59% | $28.41 | $37.91 | $50.65 |
The same DCF at each beta, starting growth unchanged:
| Beta | Value | Discount rate | DCF value |
|---|---|---|---|
| Company's own beta | 1.00 | 9.63% | $42.94 |
| Peer beta | 0.98 | 9.54% | $43.49 |
| Adjusted beta (used) | 0.99 | 9.59% | $43.21 |
The base value is the average of the methods kept in it:
| Method | Value |
|---|---|
| Discounted cash flow | $43.21 |
One method is kept, so the base value is its value: $43.21
Base value $43.21 a share
One-year price simulation: a 10% chance the price is below $54.68 and a 10% chance it is above $162.61 in a year; a 50% chance it is higher than today's $94.03, from 42.3% volatility. The simulation assumes the price drifts up at our discount rate of 9.59% a year.
At $94.03 the price implies free cash flow growing 10.1% a year for five years and then fading toward 3% over five more; its revenue has grown -3.0%.
| Week | Price | Base value |
|---|---|---|
| 2 Oct 2026 | $101.79 | $55.29 |
| 9 Oct 2026 | $102.71 | $55.90 |
| 16 Oct 2026 | $104.05 | $58.05 |
| 23 Oct 2026 | $108.74 | $58.79 |
| 30 Oct 2026 | $92.40 | $44.44 |
| 6 Nov 2026 | $97.83 | $44.88 |
| 12 Nov 2026 | $94.03 | $43.21 |
Data as of 12 Nov 2026; financials to 30 Sep 2026. Sources: company filings via EODHD, SEC EDGAR, US Treasury. How these values are computed. Not investment advice.
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