Xylem Inc.

Xylem Inc. is a global water technology company that makes the pumps, treatment systems, meters and software used to move, clean and measure water, and it generated $9.0 billion of revenue in 2025 with approximately 22,000 employees selling into roughly 150 countries. Four segments carry the business: Water Infrastructure moves and treats water and wastewater, Applied Water serves buildings and industrial processes, Measurement and Control Solutions makes smart meters and the analytics layered over them, and Water Solutions and Services runs outsourced water plants and dewatering fleets for customers who would rather buy an outcome than own the asset. The company was spun out of ITT Corporation in October 2011, and its modern shape was set in May 2023 when it closed the all-stock acquisition of Evoqua, an implied enterprise value of roughly $7.5 billion, that tripled its industrial treatment and services footprint.

This is a story about a self-help programme that has already worked, meeting the arithmetic of its own success. Xylem took adjusted EBITDA margin from 20.6% in 2024 to 22.2% in 2025 and is guiding to 23.1%-23.5% for 2026, three years ahead of the framework it set at its 2024 investor day. The mechanism is not mysterious: an 80/20 programme that has walked away from low-margin revenue, cut organisational layers and priced above inflation. But the same programme is now suppressing reported growth, China has gone from awkward to hostile, and in the first half of 2026 organic revenue growth was 0.7% — roughly a fifth of the 2025 rate.

The file turns on one question: whether 2026 is the trough of a deliberate, self-inflicted reset that clears the way for mid-single-digit growth off a higher margin base, or the year Xylem's growth algorithm quietly stepped down to a level the current multiple does not accommodate. The bull reading is that the walkaways peak this year, municipal demand is genuinely resilient, and a data-centre and industrial water cycle is forming behind it. The bear reading is that a 16x EBITDA multiple on a company that has grown organic revenue by less than 1% for two consecutive quarters is a bet on an inflection that has not yet appeared in the order book.