XYL – Market expectations are for record-high Uniform ROA, but management may have concerns about supply constraints, price increases, and labor shortages

• Xylem Inc. (XYL:USA) currently trades at a historical high relative to UAFRS-based(Uniform) earnings, with a 39.8x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about supply constraints, price increases, and labor shortages.
  
• Specifically, management may lack confidence in their ability to manage supply constraints, outpace their quarterly performance, and execute effective price increases in response to higher commodity prices. In addition, they may have concerns about the sustainability of demand and the impact of water-centric climate events around the world. Furthermore, they may be downplaying concerns about labor shortages and the impact of the pandemic on growth.