Is Xylem, Inc. overvalued or undervalued?

As of 17 October 2025, the valuation grade for Xylem, Inc. has moved from fair to expensive, indicating a shift towards overvaluation. The company appears overvalued based on its current metrics, with a P/E ratio of 35, a Price to Book Value of 3.03, and an EV to EBITDA of 20.21. In comparison, peers such as Ingersoll Rand, Inc. have a higher P/E of 52.55, while Dover Corp. shows a more attractive P/E of 43.35, suggesting that Xylem's valuation is not justified relative to its industry counterparts.
Despite a year-to-date return of 25.76%, which outperformed the S&P 500's 13.30%, the longer-term performance indicates that Xylem has lagged behind the index over three and five years, with returns of 61.14% and 59.43% respectively, compared to the S&P 500's 81.19% and 91.29%. This performance, combined with the current valuation metrics, reinforces the conclusion that Xylem, Inc. is overvalued.