Is Xylem, Inc. overvalued or undervalued?

As of 5 September 2025, the valuation grade for Xylem, Inc. has moved from very expensive to expensive, indicating a slight improvement in its valuation outlook. The company is currently considered overvalued based on its financial ratios. Key valuation metrics include a P/E ratio of 35, a Price to Book Value of 3.03, and an EV to EBITDA ratio of 20.21, all of which are elevated compared to industry norms.
In comparison to peers, Xylem's P/E ratio of 37.49 is notably higher than Dover Corp.'s attractive valuation with a P/E of 43.35, while Ingersoll Rand, Inc. is classified as very expensive with a P/E of 52.55. Additionally, Xylem's returns have lagged behind the S&P 500 over multiple periods, with a 1Y return of 7.01% compared to the S&P 500's 17.14%, suggesting that its current valuation may not be justified given its performance.