Yahoo Finance What Does Xylem Inc.'s (NYSE:XYL) Share Price Indicate?
Let's talk about the popular Xylem Inc. (NYSE:XYL). The company's shares saw a decent share price growth of 15% on the NYSE over the last few months. The recent jump in the share price has meant that the company is trading around its 52-week high. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s examine Xylem’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
See our latest analysis for Xylem
What Is Xylem Worth?
According to our valuation model, Xylem seems to be fairly priced at around 13.56% above our intrinsic value, which means if you buy Xylem today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $111.14, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Xylem’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
Can we expect growth from Xylem?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 86% over the next couple of years, the future seems bright for Xylem. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? It seems like the market has already priced in XYL’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on XYL, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
If you'd like to know more about Xylem as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 3 warning signs for Xylem you should be aware of.
If you are no longer interested in Xylem, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
