Zurn Water Solutions (ZWS) AI Stock Analysis

• Market Cap: $8.50B
• Dividend Yield: 0.8%
• Average Volume (3M): 1.02M
• Price to Earnings (P/E): 44.1
• Beta (1Y): 0.90
• Revenue Growth: 6.88%
• EPS Growth: 42.07%
• Country: US
• Employees: 2,500
• Sector: Industrials
• Sector Strength: 72
• Industry: Industrial - Pollution & Treatment Controls
• EPS (TTM): 0.36
• Shares Outstanding: 166,797,970
• 10 Day Avg. Volume: 598,049
• 30 Day Avg. Volume: 1,018,066
• PEG Ratio: 1.75
• Price to Book (P/B): 4.89
• Price to Sales (P/S): 4.62
• P/FCF Ratio: 24.77
• Enterprise Value/Market Cap: 1.04
• Enterprise Value/Revenue: 5.20
• Enterprise Value/Gross Profit: 12.00
• Enterprise Value/Ebitda: 23.62
• 1Y Price Target: $55.83
• Price Target Upside: 9.51% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7
• EPS Forecast (FY): 1.66
• Revenue Forecast (FY): $1.79B

• Rating: 75 Outperform
• Price Target: $57.00 ▲(11.81% Upside)
• Action: Reiterated Date: 02/22/26
• Date: Action: Reiterated 02/22/26

The score is driven primarily by strong fundamentals—especially robust free cash flow and improved profitability—supported by constructive price momentum and upbeat, specific 2026 guidance. The main offset is valuation (high P/E with a low yield), which raises execution risk if growth or margins disappoint.

Positive Factors

Free cash flow & earnings quality

Sustained, sizable free cash flow (~$317M in 2025) and OCF coverage above 1x indicate high earnings quality and internal funding capacity. This durable cash generation supports buybacks, dividends, deleveraging, and incremental investment without needing external capital over the next 2–6 months.

Margin expansion & operational improvement

Consistent margin expansion reflects effective productivity programs (ZEBS), supply-chain optimization and higher operating leverage. These structural improvements increase cash conversion and resilience to cyclical demand, supporting sustainable profitability if cost initiatives remain on track.

Balance sheet strength & liquidity

A conservatively leveraged balance sheet with stable equity and manageable total debt gives management flexibility for capital allocation. Combined with an expanded revolver, this durable liquidity profile supports opportunistic M&A, buybacks and cushions cyclical downturns over the medium term.

Negative Factors

Slowing revenue growth

Revenue growth has decelerated to low single digits, constraining upside from top-line expansion. Slower organic growth increases reliance on margin gains and capital deployment to drive returns, making execution on productivity and new adjacencies more critical for durable EPS improvement.

Gross-margin pressure and volatility

Material-level gross-margin compression signals input-cost or pricing pressure that operating leverage alone may not offset. If gross margins remain volatile, sustained margin and cash-flow improvements could be at risk, limiting the company's ability to reliably expand net margins long term.

Supply-chain, tariff & sourcing execution risk

An ongoing shift away from direct China sourcing and evolving tariff/commodity settings introduces execution and cost uncertainties. Transition missteps or adverse tariff moves could raise COGS or disrupt supply, pressuring margins and delivery reliability over multiple quarters.

Zurn Water Solutions Business Overview & Revenue Model

Company Description

Zurn 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 Money

Zurn Water Solutions generates revenue through multiple streams, primarily by selling its extensive range of products to plumbing contractors, distributors, and municipal agencies. The company benefits from a diversified portfolio that includes fixtures, valves, and drainage solutions, which are essential for new construction, renovation projects, and maintenance services. Additionally, ZWS has formed strategic partnerships with construction firms and engineering companies to enhance its market reach and influence. The company also invests in technology and innovation, allowing for premium pricing on advanced products that promote water efficiency, which further contributes to its earnings.

Zurn Water Solutions Financial Statement Overview

Summary

Strong cash generation and earnings quality (2025 FCF ~$317M, close to net income; OCF coverage of net income >1x) plus improving operating/EBITDA and net margins since 2022 support a solid score. Offsets include slowing recent revenue growth (~2.2% in 2025), 2025 gross-margin pressure, and less-clean long-term balance-sheet comparability due to the 2021 leverage/equity anomaly.

Income Statement

Revenue has scaled meaningfully over the period (from ~$563M in 2020 to ~$1.70B in 2025) with continued, albeit slower, growth most recently (2025 revenue growth at ~2.2%). Profitability has strengthened since 2022: operating and EBITDA margins expanded to ~16.8% and ~22.0% in 2025, and net margin improved to ~11.7% versus ~4.8% in 2022. Offsetting this, gross margin has been volatile and is down in 2025 (~41.6%) versus 2024 (~45.1%), indicating some cost or pricing pressure despite stronger operating leverage.

Balance Sheet

Leverage is currently reasonable with debt-to-equity in the mid-0.3x range in 2023–2025 and equity base stable (~$1.60B in 2025). Total debt has risen modestly alongside growth (~$581M in 2025), but remains manageable relative to equity. Returns on equity have improved to ~12.3% in 2025 from low-single digits in 2022, signaling better profitability on the capital base. A key watch-out is the earlier 2021 balance sheet showing extremely high leverage (debt-to-equity ~4.27x) driven by very low reported equity, which suggests historical structural or reporting shifts and makes long-term comparability less clean.

Cash Flow

Cash generation is a clear strength: operating cash flow and free cash flow are strong in 2025 (~$347M and ~$317M), with free cash flow up ~9.7% in 2025 and consistently close to reported earnings (free cash flow running at ~0.91–0.93x of net income in 2023–2025). Operating cash flow also covers net income comfortably in 2024–2025 (coverage ~1.18x to ~1.34x), indicating solid earnings quality. The main blemish is 2022, where operating cash flow coverage was weak (~0.34x) and free cash flow declined, pointing to a period of working-capital or investment headwinds that has since reversed.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	1.70B	1.57B	1.53B	1.28B	910.90M
Gross Profit	706.10M	707.00M	648.10M	465.50M	373.20M
EBITDA	373.60M	328.40M	273.20M	165.20M	164.60M
Net Income	198.00M	160.20M	112.70M	61.70M	120.90M
Balance Sheet
Total Assets	2.68B	2.65B	2.67B	2.86B	1.08B
Cash, Cash Equivalents and Short-Term Investments	300.50M	198.00M	136.70M	124.80M	96.60M
Total Debt	580.50M	551.60M	543.20M	579.50M	554.50M
Total Liabilities	1.08B	1.06B	1.06B	1.25B	951.30M
Stockholders Equity	1.60B	1.59B	1.60B	1.61B	126.40M
Cash Flow
Free Cash Flow	316.60M	271.70M	232.60M	89.40M	200.30M
Operating Cash Flow	346.50M	293.50M	253.90M	97.00M	223.60M
Investing Cash Flow	-29.90M	-20.20M	-4.60M	-6.60M	-21.90M
Financing Cash Flow	-217.30M	-207.50M	-239.20M	-61.10M	-356.20M

Zurn Water Solutions Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 50.98
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ZWS, the sentiment is Positive. The current price of 50.98 is above the 20-day moving average (MA) of 50.50, above the 50-day MA of 48.29, and above the 200-day MA of 44.12, indicating a bullish trend. The MACD of 0.80 indicates Positive momentum. The RSI at 59.73 is Neutral, neither overbought nor oversold. The STOCH value of 55.71 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ZWS.

Zurn Water Solutions Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FSS	77 Outperform	$7.09B	29.04	19.20%	0.49%	11.83%	11.08%
ZWS	75 Outperform	$8.50B	44.09	12.06%	0.80%	6.88%	42.07%
ERII	71 Outperform	$551.00M	24.00	9.41%	―	0.10%	1.50%
CECO	67 Neutral	$1.99B	44.38	17.71%	―	29.86%	331.33%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
ATMU	63 Neutral	$5.26B	25.76	68.46%	0.39%	3.72%	11.71%
PCT	48 Neutral	$1.14B	-4.38	-147.56%	―	―	12.57%

Zurn Water Solutions Corporate Events

Zurn Water Solutions Expands Revolving Credit Facility for Growth

On February 19, 2026, Zurn Elkay Water Solutions’ subsidiaries entered into a third amendment to their Fourth Amended and Restated First Lien Credit Agreement, refinancing existing revolving borrowings and significantly expanding their revolving credit facility from $200 million to $550 million. The amendment, which extends the revolving facility’s maturity to February 19, 2031, adjusts leverage-based covenants, interest margins, and fees, leaving the company with $540.1 million of additional borrowing capacity and $9.9 million in letters of credit, thereby enhancing its financial flexibility and potential funding for future operations and growth.

The most recent analyst rating on (ZWS) stock is a Buy with a $57.00 price target. To see the full list of analyst forecasts on Zurn Water Solutions stock, see the ZWS Stock Forecast page.