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Zurn Water Solutions (ZWS)
NYSE:ZWS
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Zurn Water Solutions
(NYSE:ZWS)
74Outperform
Positive Factors
Financial Performance
ZWS reported 4Q results with an adj. EPS of $0.32 compared to consensus at $0.28.
Growth Initiatives
The implementation of the Filter First initiative in Michigan is expected to contribute to future growth, with school spending anticipated to increase.
Negative Factors
Market Weakness
Commercial weakness persisting with a low single-digit outlook for the future.
Zurn Water Solutions (ZWS) vs. S&P 500 (SPY)
Market Cap
$5.64B
Dividend Yield1.02%
Average Volume (3M)1.08M
Price to Earnings (P/E)37.4
Beta (1Y)1.31
Revenue Growth2.35%
EPS Growth44.23%
CountryUS
Employees2,500
SectorIndustrials
Sector Strength69
IndustryIndustrial Goods
Share Statistics
EPS (TTM)0.92
Shares Outstanding170,056,260
10 Day Avg. Volume948,202
30 Day Avg. Volume1,079,215
Financial Highlights & Ratios
PEG Ratio0.85
Price to Book (P/B)N/A
Price to Sales (P/S)3.73
Price to Cash Flow (P/CF)23.00
P/FCF Ratio20.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$40.00Price Target Upside21.84% Upside
Rating ConsensusHold
Number of Analyst Covering5
Zurn Water Solutions Business Overview & Revenue Model
Company DescriptionZurn Water Solutions (ZWS) is a leading provider of water management solutions. The company operates in sectors such as plumbing, water safety, and water efficiency, offering a comprehensive range of products and services designed to manage water effectively. Key offerings include water control and safety products, hygienic and environmental solutions, and sustainable plumbing systems that are essential for residential, commercial, and industrial applications.
How the Company Makes MoneyZurn Water Solutions generates revenue through the sale of its diverse range of water management products and systems. The company's revenue model primarily involves manufacturing and distributing products such as valves, faucets, drainage systems, and advanced metering solutions to various sectors, including construction, healthcare, and education. ZWS also engages in strategic partnerships and collaborations to enhance its product offerings and market reach. Additionally, the company focuses on innovation and sustainability, ensuring that its products not only meet regulatory standards but also cater to the growing demand for eco-friendly and efficient water solutions. By addressing critical water management needs and leveraging its expertise, ZWS sustains a steady revenue stream from both new constructions and retrofitting existing systems.
Zurn Water Solutions Financial Statement Overview
Summary
Zurn Water Solutions shows strong financial performance with consistent revenue and profit growth, healthy margins, and effective cash flow management. The company maintains a stable balance sheet with manageable leverage. However, a slight decrease in total assets could be a concern for future growth.Income Statement
Zurn Water Solutions has shown a consistent growth trajectory in revenue and net income over the years. The gross profit margin stabilized at 45.1% in 2024, reflecting strong cost management and pricing power. The net profit margin increased to 10.2% in 2024 from 7.4% in 2023, indicating improved profitability. Both EBIT and EBITDA margins are healthy, with EBIT margin at 15.6% and EBITDA margin at 21.0% in 2024, showcasing operational efficiency.85
Very Positive
Balance Sheet
The company maintains a solid equity base with an equity ratio of 59.9% in 2024, implying stable financial health. The debt-to-equity ratio improved slightly to 0.35 in 2024, indicating manageable leverage. Return on equity (ROE) also improved to 10.1% in 2024, highlighting effective use of shareholders' equity to generate profits. However, the total assets have decreased, which could be a concern if it impacts future growth.78
Positive
Cash Flow
Zurn Water Solutions exhibits strong cash flow generation capabilities. The operating cash flow increased to $293.5 million in 2024, supporting a robust free cash flow of $271.7 million. The free cash flow to net income ratio is favorable, suggesting efficient cash conversion. The operating cash flow to net income ratio of 1.83 in 2024 further confirms strong cash flow performance relative to earnings.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.57B | 1.53B | 1.28B | 910.90M | 562.70M | Gross Profit |
| 707.00M | 589.40M | 465.50M | 373.20M | 253.30M | EBIT |
| 244.60M | 218.10M | 107.10M | 107.00M | 81.00M | EBITDA |
| 328.40M | 306.00M | 180.60M | 188.70M | 147.50M | Net Income Common Stockholders |
| 160.20M | 112.70M | 61.70M | 49.70M | 35.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 198.00M | 136.70M | 124.80M | 96.60M | 62.30M | Total Assets |
| 2.65B | 2.67B | 2.86B | 1.08B | 3.40B | Total Debt |
| 551.60M | 543.20M | 570.10M | 539.50M | 0.00 | Net Debt |
| 353.60M | 406.50M | 445.30M | 442.90M | -62.30M | Total Liabilities |
| 1.06B | 1.06B | 1.25B | 951.30M | 1.96B | Stockholders Equity |
| 1.59B | 1.60B | 1.61B | 126.40M | 1.44B |
| Cash Flow | Free Cash Flow | |||
| 271.70M | 232.60M | 89.40M | 200.30M | 168.00M | Operating Cash Flow |
| 293.50M | 253.90M | 97.00M | 223.60M | 196.30M | Investing Cash Flow |
| -20.20M | -4.60M | -6.60M | -21.90M | -122.50M | Financing Cash Flow |
| -207.50M | -239.20M | -61.10M | -356.20M | -409.60M |
Zurn Water Solutions Technical Analysis
Negative
32.83
Price Trends
36.70
Negative
37.56
Negative
34.62
Negative
Market Momentum
-0.96
Positive
30.50
Neutral
13.98
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ZWS, the sentiment is Negative. The current price of 32.83 is below the 20-day moving average (MA) of 34.89, below the 50-day MA of 36.70, and below the 200-day MA of 34.62, indicating a bearish trend. The MACD of -0.96 indicates Positive momentum. The RSI at 30.50 is Neutral, neither overbought nor oversold. The STOCH value of 13.98 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $5.64B | 37.44 | 9.96% | 1.02% | 2.35% | 44.23% | |
74 Outperform | $27.96B | 27.70 | 10.44% | 2.13% | 10.63% | 10.38% | |
74 Outperform | $30.05B | 35.09 | 8.55% | 1.15% | 16.23% | 34.42% | |
73 Outperform | $14.18B | 22.76 | 18.45% | 1.10% | -0.53% | 0.13% | |
72 Outperform | $8.52B | 19.01 | 34.07% | 0.56% | 3.67% | -5.03% | |
63 Neutral | $9.63B | 19.19 | 28.63% | 1.90% | -0.90% | -1.69% | |
62 Neutral | $8.16B | 12.81 | 0.47% | 3.07% | 3.83% | -16.36% |
* Industrials Sector Average
Performance Comparison
ZWS
Zurn Water Solutions
32.83
1.48
4.72%
AWK
American Water
140.86
23.05
19.57%
PNR
Pentair
85.54
4.37
5.38%
AOS
A. O. Smith Corporation
65.64
-19.05
-22.49%
WMS
Advanced Drainage Systems
109.69
-52.55
-32.39%
XYL
Xylem
123.63
-2.97
-2.35%
Zurn Water Solutions Earnings Call Summary
Earnings Call Date: Feb 4, 2025 | % Change Since: -16.48% | Next Earnings Date: Apr 29, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong performance in terms of EBITDA growth, margin expansion, and effective cash flow management, while addressing challenges in certain market segments and tariff uncertainties. The company's strategic initiatives towards sustainability and balance sheet strength are positioned as positive drivers for future growth.Highlights
Strong EBITDA Growth and Margin Expansion
The company delivered 8% adjusted EBITDA growth in Q4 2024, expanding margins to 24.6%, up 100 basis points year-over-year. For the full year, EBITDA grew by 15% to $390 million, with margins improving by 270 basis points to 24.9%.
Positive Free Cash Flow and Share Repurchases
Free cash flow for Q4 was $55 million, bringing the full year to $272 million. The company repurchased $150 million worth of shares throughout the year.
Sustainability Initiatives and Community Impact
The company advanced its sustainability strategy, including product donations in communities with high lead levels and advocacy for relevant legislation.
Strong Balance Sheet Position
The company ended 2024 with a net debt leverage below 1 at 0.8x, providing significant capital allocation flexibility.
Lowlights
Softness in Residential and Certain Commercial Segments
There was a noted softness in the residential markets and some pockets of the commercial segment within non-residential markets.
Tariff Uncertainty
The company faces uncertainties regarding tariffs, although it has reduced its exposure to China, which will be less than 10% by 2026.
Company Guidance
In the fourth quarter of fiscal year 2024, Zurn Elkay Water Solutions Corporation reported a core growth of 4%, which led to an 8% increase in adjusted EBITDA, resulting in a margin expansion to 24.6%, up 100 basis points year-over-year. For the full year, the company achieved 4% organic growth, with EBITDA increasing by 15% to $390 million, and a margin of 24.9%, an improvement of 270 basis points. Free cash flow for the quarter was $55 million, totaling $272 million for the year. The company repurchased $150 million worth of shares and allocated $20 million to its pension plan in the fourth quarter. With a net debt leverage of 0.8x, Zurn Elkay anticipates consistent market conditions for 2025, projecting an adjusted EBITDA of $405 million to $420 million and free cash flow of about $290 million.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.