Using the PEG framework with analyst consensus forward EPS growth of 19.4% plus 1.3% dividend yield, Xylem Inc. has a fair value of $106.55 based on NTM EPS (FY2026) of $5.50. The current PEG ratio is 1.12.
PEG < 1 = bargain, 1–1.5 = fair, > 2 = expensive.
PEG is most informative for high-growth companies — the PEG sweet spot.
| EPS Growth RateForward | 18.0% |
| Dividend Yield | +1.3% |
| Adjusted Growth (clamped 8–25%) | 19.4% |
| Fair P/E | 19.4x |
| NTM EPS (FY2026) | $5.50 |
| Fair Value | $106.55 |
| Period | EPS Est. | Growth | Analysts |
|---|---|---|---|
| FY2025 (actual) | $3.92 | — | — |
| FY2026E | $5.50 | +40.3% | 17 |
| FY2027E | $6.07 | +10.3% | 17 |
| FY2028E | $6.73 | +11.0% | 10 |
| FY2029E | $7.61 | +13.1% | 5 |
4Y Forward EPS CAGR: 18.0%
| Year | Net Income | EPS | YoY |
|---|---|---|---|
| FY2021 | $427.0M | $2.35 | — |
| FY2022 | $355.0M | $1.96 | -16.6% |
| FY2023 | $609.0M | $2.79 | +42.3% |
| FY2024 | $890.0M | $3.65 | +30.8% |
| FY2025 | $957.0M | $3.92 | +7.4% |
4Y Historical EPS CAGR: 13.6%
The PEG Fair Value uses the Price/Earnings-to-Growth framework. A stock is fairly valued when its P/E ratio equals its earnings growth rate (PEG = 1.0). This model adds dividend yield to the growth rate per the original PEGY formula.
Growth rate priority: analyst consensus forward EPS CAGR (when ≥ 3 analysts cover the stock), falling back to historical EPS CAGR. Using EPS rather than net income avoids distortion from share buybacks. The growth rate is clamped between 8% and 25% — below 8% would undervalue stable earners, while above 25% would overvalue unsustainable spikes.