Xylem Inc.

Methodology

Xylem's fair value calculation works reasonably well given the company's consistent earnings growth driven by water infrastructure, treatment technologies, and industrial pump applications with recurring aftermarket revenue. The method captures Xylem's position as a diversified water technology provider serving essential municipal and industrial needs. Fair value estimates are reliable because the business model emphasizes long-term water infrastructure investments, though investors should normalize for economic cycles that impact industrial capital spending.

Methodology

Xylem typically commands moderate to premium PEG ratios reflecting its exposure to secular trends in water scarcity, aging infrastructure replacement, and smart water technology adoption. The PEG framework works well for Xylem because growth rates are steady and supported by municipal water investments and industrial process needs, though investors should account for cyclical swings in industrial end markets. Comparing Xylem's PEG to other industrial technology and water infrastructure companies provides context for relative valuation.

Methodology

Xylem pays a modest dividend, as management prioritizes reinvesting in R&D, smart water technology development, and strategic acquisitions to expand the water solutions platform. PEGY adds some incremental value by incorporating the dividend alongside growth expectations. For total-return investors, PEGY captures both Xylem's steady growth in water technology and its commitment to returning cash through modest but growing dividends.