Xylem ($XYL): buy in pieces $88 to $100, long term
$XYL: I think Xylem is a buy. The guidance cut came from project timing and orders are still growing.
14% below its 200-day
12.9x EV/EBITDA vs a 5-yr avg near 23x
Backlog up 13% to $5.5B
I'm buying in pieces from $88 to $100.
Not financial advice
The bear case is the guidance. Q3 revenue fell 3% to $2.20B and was flat organically. Management cut 2026 revenue to about $8.95B and adjusted EPS to $5.40 to $5.45 from $5.55 to $5.70. It expects metering revenue to slip again in Q4 and the stock dropped 14% on Oct 27.
The chart: I read the fall from the $152.95 close on Oct 29 2025 as an A-B-C correction. A ended at $106 in May, B bounced to $125 in July and C closed at $88.23 on Oct 28. That low sits on the 78.6% retrace of the 2022 to 2025 rally near $90 and the Oct 2023 low of $87.76. Price is still under the 50-day ($103) and 200-day ($116).
The business: Q3 orders were $2.3B (up 10% organically) and backlog grew 13% to $5.5B. Adjusted EBITDA margin rose 70 bps to 23.9%. Xylem plans to sell Applied Water International and Specialty Flow Control and move to three segments on Jan 1 2027.
My plan: I'm adding between $88 and $100 and holding for years. A weekly close below $85, under the October low, means I'm wrong. At about 18x the 2026 EPS guide I think the market is pricing in more damage than the order book shows. This is a multi-year hold, not a trade.
Sources: Xylem Q3 2026 press release: orders +10% organic, revenue $2.2B, guide cut to $5.40-$5.45, divestitures · Investing.com: Q3 2026 call, backlog +13% to $5.5B, Q4 outlook · Investing.com: why Xylem fell on Oct 27 · MarketBeat: Q3 2026 results, backlog, EBITDA margin 23.9% · Yahoo Finance: XYL closed $92.86 after Q3, down ~14% · StockStory: Q3 revenue $2.20B down 3%, organic flat
Not financial advice. For informational and educational purposes only.