Xylem Sees Unusually High Options Volume (NYSE:XYL)

Key Points

• Investors bought an unusually large number of call options on Xylem—2,610 call options on Monday, about a 278% increase versus the typical daily call volume of 691.
• The board authorized a $1.50 billion share buyback (up to 4.8% of outstanding shares) and the company raised its quarterly dividend to $0.43 per share (annualized $1.72, 1.4% yield).
• Analysts collectively rate Xylem a "Moderate Buy" (nine Buys, six Holds) with an average price target of $155.31, versus the recent trade price of about $120.05.

Xylem Inc. (NYSE:XYL - Get Free Report) was the target of unusually large options trading activity on Monday. Investors purchased 2,610 call options on the company. This is an increase of approximately 278% compared to the typical daily volume of 691 call options.

Wall Street Analyst Weigh In

A number of equities research analysts have weighed in on the stock. Robert W. Baird set a $161.00 price target on shares of Xylem in a research note on Wednesday, February 11th. William Blair began coverage on shares of Xylem in a research report on Monday, January 26th. They set an "outperform" rating on the stock. Citigroup decreased their target price on shares of Xylem from $182.00 to $174.00 and set a "buy" rating on the stock in a research report on Wednesday, February 11th. Stifel Nicolaus decreased their target price on shares of Xylem from $175.00 to $163.00 and set a "buy" rating on the stock in a research report on Tuesday, April 14th. Finally, Jefferies Financial Group reiterated a "hold" rating and set a $130.00 target price (down from $140.00) on shares of Xylem in a research report on Tuesday, March 31st. Nine equities research analysts have rated the stock with a Buy rating and six have given a Hold rating to the company. Based on data from MarketBeat, Xylem has an average rating of "Moderate Buy" and an average price target of $155.31.

Institutional Inflows and Outflows

Large investors have recently added to or reduced their stakes in the business. Ferguson Wellman Capital Management Inc. acquired a new position in shares of Xylem in the 3rd quarter valued at $1,148,000. Vanguard Personalized Indexing Management LLC grew its holdings in shares of Xylem by 19.0% in the 3rd quarter. Vanguard Personalized Indexing Management LLC now owns 56,216 shares of the industrial products company's stock valued at $8,292,000 after buying an additional 8,960 shares during the period. Fisher Asset Management LLC grew its holdings in shares of Xylem by 6.4% in the 3rd quarter. Fisher Asset Management LLC now owns 404,613 shares of the industrial products company's stock valued at $59,681,000 after buying an additional 24,352 shares during the period. Covea Finance grew its holdings in shares of Xylem by 25.5% in the 3rd quarter. Covea Finance now owns 231,547 shares of the industrial products company's stock valued at $34,153,000 after buying an additional 47,000 shares during the period. Finally, AEGON ASSET MANAGEMENT UK Plc grew its holdings in shares of Xylem by 9.8% in the 3rd quarter. AEGON ASSET MANAGEMENT UK Plc now owns 417,651 shares of the industrial products company's stock valued at $61,629,000 after buying an additional 37,189 shares during the period. 87.96% of the stock is currently owned by institutional investors and hedge funds.

Xylem Price Performance

Shares of XYL traded down $1.06 during trading hours on Monday, hitting $120.05. The stock had a trading volume of 279,978 shares, compared to its average volume of 1,932,764. The company's fifty day moving average is $125.00 and its two-hundred day moving average is $136.46. The company has a debt-to-equity ratio of 0.12, a current ratio of 1.62 and a quick ratio of 1.28. Xylem has a 52 week low of $107.04 and a 52 week high of $154.27. The stock has a market capitalization of $29.19 billion, a price-to-earnings ratio of 30.62, a P/E/G ratio of 1.74 and a beta of 1.18.

Xylem (NYSE:XYL - Get Free Report) last announced its quarterly earnings results on Tuesday, February 10th. The industrial products company reported $1.42 earnings per share (EPS) for the quarter, meeting the consensus estimate of $1.42. Xylem had a net margin of 10.59% and a return on equity of 11.11%. During the same quarter in the prior year, the company posted $1.18 earnings per share. The firm's revenue was up 6.3% on a year-over-year basis. Xylem has set its FY 2026 guidance at 5.350-5.560 EPS. On average, analysts anticipate that Xylem will post 4.65 EPS for the current year.

Xylem declared that its board has initiated a share repurchase plan on Wednesday, February 25th that allows the company to buyback $1.50 billion in outstanding shares. This buyback authorization allows the industrial products company to repurchase up to 4.8% of its stock through open market purchases. Stock buyback plans are generally an indication that the company's management believes its stock is undervalued.

Xylem Increases Dividend

The firm also recently announced a quarterly dividend, which was paid on Tuesday, March 24th. Shareholders of record on Tuesday, February 24th were given a dividend of $0.43 per share. This represents a $1.72 dividend on an annualized basis and a yield of 1.4%. The ex-dividend date was Tuesday, February 24th. This is a boost from Xylem's previous quarterly dividend of $0.40. Xylem's dividend payout ratio is currently 43.88%.

About Xylem

Xylem Inc NYSE: XYL is a global water technology company that designs, manufactures and services engineered systems and equipment for the transport, treatment, testing and efficient use of water. Its product portfolio spans pumps and pumping systems, valves, filtration and disinfection equipment, sensors and analytical instruments, and digital solutions for monitoring and control of water infrastructure. Xylem serves the full water cycle with offerings for water and wastewater utilities, industrial customers, commercial and residential buildings, and agricultural applications.

The company was established as an independent publicly traded company in 2011 following a corporate spin-off from ITT Corporation and is headquartered in Rye Brook, New York.

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