Is Xylem, Inc. overvalued or undervalued?

As of 31 October 2025, the valuation grade for Xylem, Inc. has moved from very expensive to expensive, indicating a slight improvement in perceived value. The company appears to be 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 significantly higher P/E of 52.55, while Dover Corp. is at 43.35, suggesting that Xylem's valuation is not as extreme as some competitors but still elevated.
Despite a strong year-to-date return of 29.02% compared to the S&P 500's 16.30%, Xylem's longer-term performance has lagged behind, with a 5-year return of 63.40% versus the S&P 500's 109.18%. This discrepancy reinforces the notion that while Xylem has performed well recently, its current valuation may not be justified given its relative performance and the valuation metrics compared to its peers.