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Zurn Water Solutions (ZWS)
NYSE:ZWS
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Zurn Water Solutions
(NYSE:ZWS)
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Rating:80Outperform
Price Target:
$53.00
▲(15.24% Upside)
Zurn Water Solutions receives a strong overall score due to its robust financial performance and positive earnings call highlights. The company's technical indicators suggest bullish momentum, although the valuation indicates the stock may be overvalued. The raised guidance and sustainability achievements further bolster the stock's attractiveness.
Positive Factors
Revenue Growth
The company’s consistent organic revenue growth indicates strong market demand and effective execution of growth strategies, enhancing its competitive position.
Cash Generation
Strong cash generation supports financial stability and provides flexibility for investments, debt reduction, or shareholder returns, reinforcing long-term business health.
Sustainability Initiatives
Zurn's focus on sustainability not only aligns with global environmental trends but also attracts eco-conscious customers, bolstering its brand and market appeal.
Negative Factors
Residential Market Softness
Softness in the residential market could limit growth opportunities and affect revenue streams, posing a challenge to maintaining overall sales momentum.
Tariff Impacts
Ongoing tariff impacts may increase costs and pressure margins, potentially affecting profitability and competitive pricing strategies in the long term.
Leverage
While leverage is manageable, further reduction could enhance financial flexibility and reduce risk, especially in volatile market conditions or economic downturns.
Zurn Water Solutions (ZWS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$7.87B
Dividend Yield0.77%
Average Volume (3M)1.05M
Price to Earnings (P/E)46.4
Beta (1Y)1.04
Revenue Growth4.74%
EPS Growth30.64%
CountryUS
Employees2,500
SectorIndustrials
Sector Strength72
IndustryIndustrial - Pollution & Treatment Controls
Share Statistics
EPS (TTM)0.42
Shares Outstanding167,552,520
10 Day Avg. Volume1,430,786
30 Day Avg. Volume1,047,437
Financial Highlights & Ratios
PEG Ratio0.93
Price to Book (P/B)4.04
Price to Sales (P/S)4.09
P/FCF Ratio23.57
Enterprise Value/Market Cap0.84
Enterprise Value/Revenue4.07
Enterprise Value/Gross Profit8.96
Enterprise Value/Ebitda18.96
Forecast
1Y Price Target
$48.40Price Target Upside5.24% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
Zurn Water Solutions Business Overview & Revenue Model
Company DescriptionZurn Elkay Water Solutions Corporation designs, procures, manufactures, and markets water system solutions that provide and enhance water quality, safety, flow control, and conservation in and around non-residential buildings. It offers finish plumbing, drainage and interceptors, water control and backflow, fire protection, PEX pipe fittings and accessories, and repair parts under the Zurn brand name; and hand and hair dryers, and baby changing stations under the World Dryer brand name. The company also offers stainless steel products under the Just Manufacturing brand name, which include stainless steel sinks for classrooms and academic institutions; ADA commercial stainless-steel sinks and plumbing fixtures for assisted living; faucets, bubblers, drains, and accessories; and stainless steel fixtures and related products for food services, government, healthcare, hospitality, institutional, and residential markets. It serves higher education, healthcare, retail, restaurant, hospitality, education, government, and fire protection markets. The company was formerly known as Zurn Water Solutions Corporation. Zurn Elkay Water Solutions Corporation was incorporated in 2006 and is headquartered in Milwaukee, Wisconsin.
How the Company Makes MoneyZurn Water Solutions generates revenue through multiple key streams. The primary source of income comes from the sale of its extensive product line, which includes plumbing fixtures, drainage products, and water treatment systems. Additionally, ZWS earns revenue from providing maintenance services, consulting, and installation for its products. The company has established significant partnerships with construction firms, property developers, and government agencies, which helps to secure large contracts and create a stable client base. Furthermore, ZWS focuses on innovation and sustainability, which attracts customers looking for eco-friendly solutions, thereby enhancing market competitiveness and driving sales growth.
Zurn Water Solutions Earnings Call Summary
Earnings Call Date:Jul 29, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Nov 04, 2025
Earnings Call Sentiment Positive
The earnings call reflected strong organic growth, record margins, and significant sustainability achievements, alongside challenges in the residential market and ongoing tariff impacts. The company raised its full-year guidance, indicating confidence in continued performance.Q2-2025 Updates
Positive Updates
Strong Organic Growth
Zurn Elkay Water Solutions posted 8% organic growth in Q2 2025, with EBITDA growing 13% year-over-year and margins expanding 120 basis points.
Record EBITDA Margin
The company achieved an adjusted EBITDA margin of 26.5%, the highest since the Zurn Elkay merger, driven by volume leverage, productivity initiatives, and continuous improvement activities.
Sustainability Achievements
Delivered 1.2 billion gallons of safer, cleaner drinking water, up 21% from the previous year, and prevented 9.6 billion single-use plastic water bottles from entering water streams.
Cash Flow and Leverage
Free cash flow exceeded $100 million for the first time, ending at $102 million, with net debt leverage at 0.7x, the lowest as a public company.
Innovative Product Launch
Introduced Elkay Pro Filtration, enhancing the competitive advantage with features like faster filter changes and longer filter life.
Raised Full-Year Guidance
Due to strong performance, raised full-year sales, EBITDA, and free cash flow guidance, with core sales growth expected to be at least 5% year-over-year.
Negative Updates
Residential Market Softness
While nonresidential markets remain positive, residential markets are experiencing some softness impacting overall market performance.
Tariff Impacts
Tariff costs are expected to impact between $35 million and $45 million in 2025, despite some reductions from previous estimates.
Company Guidance
During the Zurn Elkay Water Solutions Q2 2025 earnings call, the company announced an 8% organic sales growth and a 13% increase in EBITDA, with margins expanding by 120 basis points to 26.5%. Sales totaled $445 million, reflecting solid execution of growth initiatives. The company reported a net debt leverage of 0.7x and a quarterly free cash flow exceeding $100 million for the first time. Zurn Elkay also highlighted its sustainability achievements, including delivering 1.2 billion gallons of safer drinking water and preventing 9.6 billion single-use plastic bottles from entering water streams. In response to evolving tariffs, the annual tariff cost impact is expected to be between $35 million and $45 million, a reduction from prior estimates. Despite some softness in the residential market, the company raised its full-year guidance for sales, EBITDA, and free cash flow, projecting at least 5% core sales growth and an EBITDA range of $420 million to $430 million for the full year.Zurn Water Solutions Financial Statement Overview
Summary
Zurn Water Solutions demonstrates strong financial performance with consistent revenue growth, solid profitability, and effective cash management. The company has a healthy gross profit margin of 45.46% and a net profit margin of 10.78%. The balance sheet is stable with a manageable debt-to-equity ratio of 0.32, though there is room for improvement in reducing leverage.Income Statement
Zurn Water Solutions demonstrates strong income statement metrics with consistent revenue growth and improving profitability. The gross profit margin for TTM is a healthy 45.46%, and the net profit margin is at 10.78%. The company shows robust top-line growth, with a TTM revenue growth rate of 3.03%. The EBIT and EBITDA margins are also solid, at 16.13% and 20.65%, respectively, indicating efficient operations and cost management.88
Very Positive
Balance Sheet
The balance sheet of Zurn Water Solutions is stable with a strong equity position. The debt-to-equity ratio is at 0.32, reflecting a manageable level of debt relative to equity. The return on equity (ROE) is 11.12%, indicating decent profitability relative to shareholder investment. The equity ratio is 58.96%, suggesting a solid foundation of assets financed by equity, though the balance sheet leverage could be reduced further.75
Positive
Cash Flow
Zurn Water Solutions shows strong cash flow performance with a TTM free cash flow to net income ratio of 1.84, indicating effective cash generation relative to profits. The operating cash flow to net income ratio is 2.02, demonstrating strong cash conversion from earnings. The free cash flow growth rate is 17.79%, pointing to positive cash flow trajectory and efficient capital expenditure management.82
Very Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.61B | 1.57B | 1.53B | 1.28B | 910.90M | 562.70M |
| Gross Profit | 733.90M | 707.00M | 648.10M | 465.50M | 373.20M | 253.30M |
| EBITDA | 346.80M | 328.40M | 273.20M | 165.20M | 164.60M | 145.80M |
| Net Income | 174.00M | 160.20M | 112.70M | 61.70M | 120.90M | 118.20M |
Balance Sheet | ||||||
| Total Assets | 2.65B | 2.65B | 2.67B | 2.86B | 1.08B | 3.40B |
| Cash, Cash Equivalents and Short-Term Investments | 201.90M | 198.00M | 136.70M | 124.80M | 96.60M | 62.30M |
| Total Debt | 496.90M | 551.60M | 543.20M | 570.10M | 539.50M | 0.00 |
| Total Liabilities | 1.09B | 1.06B | 1.06B | 1.25B | 951.30M | 1.96B |
| Stockholders Equity | 1.56B | 1.59B | 1.60B | 1.61B | 126.40M | 1.44B |
Cash Flow | ||||||
| Free Cash Flow | 281.50M | 271.70M | 232.60M | 89.40M | 200.30M | 168.00M |
| Operating Cash Flow | 308.00M | 293.50M | 253.90M | 97.00M | 223.60M | 196.30M |
| Investing Cash Flow | -26.50M | -20.20M | -4.60M | -6.60M | -21.90M | -122.50M |
| Financing Cash Flow | -242.00M | -207.50M | -239.20M | -61.10M | -356.20M | -409.60M |
Zurn Water Solutions Technical Analysis
Neutral
45.99
Price Trends
43.99
Positive
40.14
Positive
37.71
Positive
Market Momentum
0.77
Positive
50.95
Neutral
33.34
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ZWS, the sentiment is Neutral. The current price of 45.99 is below the 20-day moving average (MA) of 46.43, above the 50-day MA of 43.99, and above the 200-day MA of 37.71, indicating a neutral trend. The MACD of 0.77 indicates Positive momentum. The RSI at 50.95 is Neutral, neither overbought nor oversold. The STOCH value of 33.34 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for ZWS.
Zurn Water Solutions Risk Analysis
Zurn Water Solutions disclosed 31 risk factors in its most recent earnings report. Zurn Water Solutions reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Zurn Water Solutions Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $7.87B | 46.39 | 10.81% | 0.77% | 4.74% | 30.64% | |
79 Outperform | 3.67B | 20.07 | 81.62% | 0.46% | 1.53% | 8.93% | |
78 Outperform | 7.38B | 34.62 | 17.56% | 0.45% | 9.09% | 9.64% | |
76 Outperform | 1.76B | 34.85 | 17.58% | ― | 15.74% | 294.80% | |
74 Outperform | 812.87M | 36.97 | 13.03% | ― | 6.19% | 15.04% | |
38 Underperform | 2.43B | -8.06 | ― | ― | ― | -79.12% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% |
* Industrials Sector Average
Performance Comparison
ZWS
Zurn Water Solutions
45.99
11.22
32.27%
CECO
Ceco Environmental
49.89
21.30
74.50%
ERII
Energy Recovery
15.28
-1.87
-10.90%
FSS
Federal Signal
121.32
29.05
31.48%
PCT
PureCycle Technologies
13.49
4.03
42.60%
ATMU
Atmus Filtration Technologies, Inc.
44.70
7.73
20.91%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.