Xylem faces risks from general economic conditions (spending, interest rates, inflation), geopolitical events (Russia/Ukraine conflict), supply chain disruptions (material shortages), competition, product liability, and legal proceedings (environmental, tax, and contract disputes). The acquisition of Evoqua carries integration risks and uncertainty about realizing synergies. Foreign currency fluctuations and potential impairments to goodwill and intangible assets are also noted.
Financial Upside
Xylem experienced revenue growth (20.2% year-over-year) and operating income growth (68.3% year-over-year) in the nine months ended September 30, 2024. Strong order growth (8.4% year-over-year) and improved margins (adjusted EBITDA margin of 21.2%) suggest positive operational performance. The Evoqua acquisition, while carrying integration risks, is expected to generate synergies and economies of scale. Increased backlog and potential revenue from the Idrica acquisition represent further upside potential.
