Comparing Xylem (NYSE:XYL) and GFL Environmental (NYSE:GFL)

Xylem (NYSE:XYL) and GFL Environmental (NYSE:GFL) are both large-cap business services companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, dividends, institutional ownership, profitability, earnings, analyst recommendations and risk.

Profitability

This table compares Xylem and GFL Environmental’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Xylem	10.54%	10.12%	6.62%
GFL Environmental	36.01%	3.93%	1.43%

Insider and Institutional Ownership

88.0% of Xylem shares are held by institutional investors. Comparatively, 64.7% of GFL Environmental shares are held by institutional investors. 0.3% of Xylem shares are held by insiders. Comparatively, 8.7% of GFL Environmental shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Xylem and GFL Environmental”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Xylem	$8.56 billion	3.54	$890.00 million	$3.72	33.46
GFL Environmental	$5.62 billion	3.23	-$527.43 million	$4.88	10.15

Xylem has higher revenue and earnings than GFL Environmental. GFL Environmental is trading at a lower price-to-earnings ratio than Xylem, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent recommendations for Xylem and GFL Environmental, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Xylem	0	3	6	0	2.67
GFL Environmental	0	2	8	2	3.00

Xylem presently has a consensus price target of $143.71, indicating a potential upside of 15.47%. GFL Environmental has a consensus price target of $54.50, indicating a potential upside of 10.01%. Given Xylem’s higher probable upside, equities analysts plainly believe Xylem is more favorable than GFL Environmental.

Dividends

Xylem pays an annual dividend of $1.60 per share and has a dividend yield of 1.3%. GFL Environmental pays an annual dividend of $0.06 per share and has a dividend yield of 0.1%. Xylem pays out 43.0% of its earnings in the form of a dividend. GFL Environmental pays out 1.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Xylem has raised its dividend for 2 consecutive years and GFL Environmental has raised its dividend for 5 consecutive years.

Volatility and Risk

Xylem has a beta of 1.13, meaning that its share price is 13% more volatile than the S&P 500. Comparatively, GFL Environmental has a beta of 1.04, meaning that its share price is 4% more volatile than the S&P 500.

Summary

Xylem beats GFL Environmental on 10 of the 18 factors compared between the two stocks.

About Xylem

Xylem Inc., together with its subsidiaries, engages in the design, manufacture, and servicing of engineered products and solutions worldwide. It operates through four segments: Water Infrastructure, Applied Water, Measurement & Control Solutions, and Integrated Solutions and Services. The Water Infrastructure segment offers products, including water, storm water, and wastewater pumps; controls and systems; filtration, disinfection, and biological treatment equipment; and mobile dewatering equipment and rental services under the ADI, Flygt, Godwin, Sanitaire, Magneto, Neptune Benson, Ionpure, Leopold, Wedeco, and Xylem Vue brands. The Applied Water segment provides pumps, valves, heat exchangers, controls, and dispensing equipment systems under the Goulds Water Technology, Bell & Gossett, A-C Fire Pump, Standard Xchange, Lowara, Jabsco, Xylem Vue, and Flojet brands. The Measurement & Control Solutions segment offers smart meters, networked communication devices, data analytics, test equipment, controls, sensor devices, software and managed services, and critical infrastructure services; and software and services, including cloud-based analytics, remote monitoring and data management, leak detection, condition assessment, asset management, and pressure monitoring solutions, as well as testing equipment. This segment sells its products under the Pure Technologies, Sensus, Smith Blair, WTW, Xylem Vue, and YSI brands. The Integrated Solutions and Services segment provides maintenance services, mobile services, digital outsourced solutions, wastewater systems, environmental remediation, odor and corrosion control, filtration, reverse osmosis, ion exchange, and deionization under Aquapro, WaterOne, and Ion Pure brands. Xylem Inc. was formerly known as ITT WCO, Inc. and changed its name to Xylem Inc. in May 2011. Xylem Inc. was incorporated in 2011 and is headquartered in Washington, District of Columbia.

About GFL Environmental

GFL Environmental Inc. offers non-hazardous solid waste management and environmental services in Canada and the United States. It offers solid waste management, liquid waste management, and soil remediation services, including collection, transportation, transfer, recycling, and disposal services for municipal, residential, and commercial, and industrial customers. The company was incorporated in 2007 and is headquartered in Vaughan, Canada.