Munger Mode rating: 3 out of 5 — Hold. Our own rating from the research report below, on business quality first: moat durability and management, with price separating the top three.
Xylem is what we'd call a good-verging-on-wonderful business — the world's largest pure-play water technology company, with genuine franchises in wastewater pumps, smart water metering, and outsourced industrial water services, riding one of the most durable demand streams on earth: the world's aging, underfunded water infrastructure. New management is doing nearly everything we'd want — walking away from bad revenue, expanding margins 150 basis points a year, and buying back stock in size below intrinsic value for the first time in the company's history. But two things keep our checkbook in the drawer. First, the reported returns on total capital remain mediocre — roughly 7-8% — the lingering hangover of paying $7.5 billion for Evoqua in 2023. The business earns fine returns on tangible capital; the corporation has historically overpaid to assemble it.
Recent filings analysed: 8-K (2026-07-28), 10-Q (2026-07-28), 8-K (2026-05-29), 8-K (2026-05-18).
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