Zurn Water Solutions (ZWS) AI Stock Analysis

• Market Cap: $6.11B
• Dividend Yield: 0.99%
• Average Volume (3M): 601.89K
• Price to Earnings (P/E): 37.1
• Beta (1Y): 1.19
• Revenue Growth: 3.22%
• EPS Growth: 38.39%
• Country: US
• Employees: 2,500
• Sector: Industrials
• Sector Strength: 87
• Industry: Industrial - Pollution & Treatment Controls
• EPS (TTM): 0.31
• Shares Outstanding: 168,252,270
• 10 Day Avg. Volume: 494,993
• 30 Day Avg. Volume: 601,890
• PEG Ratio: 0.78
• Price to Book (P/B): 3.20
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 22.03
• Enterprise Value/Market Cap: 1.11
• Enterprise Value/Revenue: 1.08
• Enterprise Value/Gross Profit: 9.41
• Enterprise Value/Ebitda: 5.31
• 1Y Price Target: $36.60
• Price Target Upside: 3.95% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

• Rating: 72 Outperform
• Price Target: $39.00 ▲(10.76%Upside)

Zurn Water Solutions has a solid financial foundation with strong revenue growth and profitability margins. The earnings call provided positive insights into operational performance and strategic initiatives. However, the high valuation and mixed technical indicators suggest caution. Governance improvements also contribute positively to stakeholder confidence.

Positive Factors

Earnings

ZWS reported 1Q25 adjusted EPS of $0.31, above the estimate and consensus of $0.29, driven by both sales and margin upside.

Share Repurchase

ZWS accelerated share repurchases in 1Q (~$77M; ~2.3M shares) ahead of expectations.

Supply Chain Management

There is an opportunity for investors to add a high quality company with high quality management and proven record for supply chain management and pricing power.

Negative Factors

Commercial Weakness

Commercial weakness persisting with a low single-digit outlook for the future.

Tariff Exposure

Investors have been concerned that tariff exposure will weigh on margins with 25% of Zurn's direct material spend coming from China, which will be subject to 145% tariffs, and another 25% coming from SE Asia that will be subject to 10% tariffs.

Uncertainty

Uncertainty is the enemy of investment, and the global trading rules remain very uncertain.

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 primarily through the sale of its comprehensive range of water management products. The company's key revenue streams are derived from its plumbing and drainage solutions, which are widely used in commercial, residential, and industrial buildings. Zurn also benefits from strategic partnerships with construction firms and distributors, enhancing its market reach and product accessibility. Additionally, Zurn's focus on sustainability and innovation allows it to tap into growing market demands for eco-friendly and efficient water management solutions, further contributing to its earnings.

Zurn Water Solutions Financial Statement Overview

Summary

Zurn Water Solutions exhibits strong financial performance with significant revenue growth and healthy profitability margins. The balance sheet reflects moderate leverage and effective equity utilization, though there are minor equity growth concerns. The company's cash flow position is stable, supporting its operational and strategic objectives. Continued focus on operational efficiencies and equity growth will further enhance financial resilience.

Income Statement

Zurn Water Solutions has demonstrated strong revenue growth with a 23.4% increase in total revenue from 2024 to 2025 TTM. The company's gross profit margin stands at 44.5% TTM, indicating efficient cost management. Net profit margin has improved to 10.7% TTM, with EBIT and EBITDA margins at 16.2% and 21.7% TTM respectively, showcasing solid profitability. However, slight fluctuations in gross profit suggest room for improvement in operational efficiency.

Balance Sheet

The company maintains a healthy balance sheet with a debt-to-equity ratio of 0.36, indicating moderate leverage. The return on equity (ROE) is strong at 11% TTM, reflecting effective use of shareholder equity to generate profits. An equity ratio of 59.3% TTM suggests a stable financial structure. However, a decrease in stockholders' equity over the past year signals potential challenges in equity growth.

Cash Flow

Zurn Water Solutions shows robust cash flow management with a free cash flow growth rate of -4.3% TTM, indicating stable cash generation capabilities. The operating cash flow to net income ratio is 1.67 TTM, demonstrating efficient conversion of income to cash. Furthermore, the free cash flow to net income ratio of 1.53 TTM underscores strong cash flow adequacy. Despite a slight decrease in free cash flow, the company's cash flow remains resilient.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
1.58B	1.57B	1.53B	1.28B	910.90M	562.70M
	Gross Profit
717.90M	707.00M	648.10M	465.50M	373.20M	253.30M
	EBIT
254.80M	244.60M	191.40M	107.10M	107.00M	81.00M
	EBITDA
341.10M	328.40M	273.20M	165.20M	164.60M	145.80M
	Net Income Common Stockholders
169.50M	160.20M	112.70M	61.70M	120.90M	118.20M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
292.50M	198.00M	136.70M	124.80M	96.60M	62.30M
	Total Assets
3.26B	2.65B	2.67B	2.86B	1.08B	3.40B
	Total Debt
1.24B	551.60M	543.20M	570.10M	539.50M	0.00
	Net Debt
945.50M	353.60M	406.50M	445.30M	442.90M	-62.30M
	Total Liabilities
2.03B	1.06B	1.06B	1.25B	951.30M	1.96B
	Stockholders Equity
1.23B	1.59B	1.60B	1.61B	126.40M	1.44B
Cash Flow		Free Cash Flow
260.10M	271.70M	232.60M	89.40M	200.30M	168.00M
	Operating Cash Flow
282.50M	293.50M	253.90M	97.00M	223.60M	196.30M
	Investing Cash Flow
-22.40M	-20.20M	-4.60M	-6.60M	-21.90M	-122.50M
	Financing Cash Flow
-268.70M	-207.50M	-239.20M	-61.10M	-356.20M	-409.60M

Zurn Water Solutions Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 35.21
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• 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 Negative. The current price of 35.21 is below the 20-day moving average (MA) of 36.34, above the 50-day MA of 34.10, and below the 200-day MA of 35.69, indicating a neutral trend. The MACD of 0.32 indicates Positive momentum. The RSI at 45.06 is Neutral, neither overbought nor oversold. The STOCH value of 34.86 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ZWS.

Zurn Water Solutions Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CECO	79 Outperform	$982.92M	21.43	18.34%	―	8.89%	278.44%
FSS	78 Outperform	$6.17B	29.63	18.78%	0.55%	7.85%	15.78%
ATMU	74 Outperform	$3.00B	15.93	95.48%	0.55%	1.43%	12.88%
ZWS	72 Outperform	$6.11B	37.13	10.49%	0.99%	3.22%	38.39%
Sector *	66 Neutral	$4.51B	12.22	5.40%	3.63%	4.14%	-12.01%
ERII	64 Neutral	$691.05M	34.50	10.35%	―	10.93%	6.99%
PCT	38 Underperform	$2.01B	―	-67.71%	―	―	-180.10%

Zurn Water Solutions Corporate Events

Zurn Water Solutions Holds Annual Stockholders Meeting

On May 1, 2025, Zurn Elkay Water Solutions Corporation held its Annual Meeting of Stockholders, where several key decisions were made. Stockholders approved an amendment to the Performance Incentive Plan, increasing the shares available for issuance by 2,500,000, elected four directors for terms expiring in 2028, and ratified Ernst & Young LLP as the independent auditor for fiscal year 2025. These decisions are expected to strengthen the company’s governance and financial oversight, potentially impacting its market positioning and stakeholder confidence.