Zurn Water Solutions (ZWS) AI Stock Analysis

• Market Cap: $7.85B
• Dividend Yield: 0.8%
• Average Volume (3M): 801.89K
• Price to Earnings (P/E): 41.8
• Beta (1Y): 0.93
• 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: 167,350,810
• 10 Day Avg. Volume: 944,599
• 30 Day Avg. Volume: 801,888
• PEG Ratio: 0.93
• Price to Book (P/B): 4.04
• Price to Sales (P/S): 4.09
• P/FCF Ratio: 23.57
• Enterprise Value/Market Cap: 1.05
• Enterprise Value/Revenue: 4.95
• Enterprise Value/Gross Profit: 11.25
• Enterprise Value/Ebitda: 22.55
• 1Y Price Target: $53.50
• Price Target Upside: 13.68% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 72 Outperform
• Price Target: $53.00 ▲(12.62% Upside)

The score is driven primarily by improving financial performance (strong free cash flow and expanding profitability) and a strong earnings update with raised outlook and enhanced shareholder returns. These positives are tempered by expensive valuation (high P/E with a low dividend yield) and only neutral technical momentum due to a slightly negative MACD.

Positive Factors

Free Cash Flow Strength

Sustained high free cash flow (~$289M TTM) that tracks earnings closely (≈0.91x) and operating cash running ahead of net income indicates durable cash generation. This underpins reinvestment, debt service, buybacks and dividend support, enhancing long-term financial flexibility.

Margin Expansion & Profitability

Meaningful margin improvement and stable gross margins (~45%) with operating profitability expansion signal improving pricing power and cost control. Better margins drive higher ROE and cash flow conversion, strengthening durable earnings quality and ability to fund growth and returns.

Balance-Sheet Repair & Liability Removal

Terminating the U.S. pension plan removed a $200M liability and, combined with low leverage (recently noted as the lowest as a public company), materially improves balance-sheet flexibility. This structural move reduces long-term funding risk and enables capital allocation for buybacks, dividends, or M&A.

Negative Factors

Modest Top-Line Growth

Revenue growth has been modest (low-single-digits; TTM up ~2.8%), limiting the company’s ability to meaningfully scale revenue-driven operating leverage. Over a 2–6 month horizon, constrained organic growth can cap long-term margin expansion and returns absent new structural demand or M&A.

Tariff Cost Headwinds

A recurring ~$50M tariff headwind is a structural cost pressure that can compress margins unless offset by price increases or productivity gains. Persistent tariffs reduce operating leverage and force tougher pricing choices with customers, potentially slowing durable margin and cash-flow improvement.

Historical Leverage & Cash Conversion Volatility

Fluctuating leverage and earlier periods of weak cash conversion (e.g., 2020–2022 anomalies) indicate sensitivity to cycle and working-capital timing. This reduces predictability of free cash flow and increases comparability risk, complicating long-term planning and capital allocation under stress.

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

Financials are solid, led by strong cash generation and improving profitability. Free cash flow is high and tracks earnings well (good earnings quality), margins and ROE have improved, and leverage is conservative in recent periods. Offsetting factors are only modest recent revenue growth and some historical volatility/inconsistency in leverage and cash conversion.

Income Statement

Profitability and momentum are solid. TTM (Trailing-Twelve-Months) revenue is up ~2.8% versus 2024, while profitability improved meaningfully: net margin rose to ~11.6% (from ~10.2% in 2024 and ~7.4% in 2023) and operating profitability also expanded. Gross margin is strong and stable around ~45% in 2024–TTM after weaker levels in 2022–2023. Main drawback is that recent top-line growth is moderate (low-single-digits) and the 2020 revenue decline highlights some cyclicality in the history.

Balance Sheet

Leverage looks manageable in the most recent periods, with debt-to-equity around ~0.35–0.38 in 2024 and TTM (Trailing-Twelve-Months), supporting balance-sheet flexibility. Returns on shareholder capital have improved steadily (ROE ~7.0% in 2023 to ~10.1% in 2024 and ~12.2% TTM), consistent with rising earnings. The key weakness is historical inconsistency in leverage/structure (e.g., very high debt-to-equity in 2021 and an apparent anomaly in 2020), which adds some comparability and balance-sheet quality risk when looking across years.

Cash Flow

Cash generation is a clear strength. TTM (Trailing-Twelve-Months) free cash flow is high (~$289M) and grew ~2.5%, and free cash flow is consistently close to reported earnings (about ~0.91x net income TTM and ~0.93x in 2024), suggesting good earnings quality. Operating cash flow is also running ahead of net income in 2024 and TTM, supporting reinvestment and debt service capacity. The main weakness is volatility earlier in the period—2022 had weaker cash conversion (operating cash flow below net income) and negative free cash flow growth, indicating working-capital or timing sensitivity.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.66B	1.57B	1.53B	1.28B	910.90M	562.70M
Gross Profit	730.40M	707.00M	648.10M	465.50M	373.20M	253.30M
EBITDA	364.20M	328.40M	273.20M	165.20M	164.60M	145.80M
Net Income	192.30M	160.20M	112.70M	61.70M	120.90M	118.20M
Balance Sheet
Total Assets	2.68B	2.65B	2.67B	2.86B	1.08B	3.40B
Cash, Cash Equivalents and Short-Term Investments	260.10M	198.00M	136.70M	124.80M	96.60M	62.30M
Total Debt	598.30M	551.60M	543.20M	570.10M	539.50M	1.20B
Total Liabilities	1.09B	1.06B	1.06B	1.25B	951.30M	1.96B
Stockholders Equity	1.59B	1.59B	1.60B	1.61B	126.40M	1.44B
Cash Flow
Free Cash Flow	288.60M	271.70M	232.60M	89.40M	200.30M	168.00M
Operating Cash Flow	318.40M	293.50M	253.90M	97.00M	223.60M	196.30M
Investing Cash Flow	-29.80M	-20.20M	-4.60M	-6.60M	-21.90M	-122.50M
Financing Cash Flow	-215.80M	-207.50M	-239.20M	-61.10M	-356.20M	-409.60M

Zurn Water Solutions Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 47.06
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• 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 47.06 is above the 20-day moving average (MA) of 46.59, above the 50-day MA of 46.97, and above the 200-day MA of 42.70, indicating a bullish trend. The MACD of -0.05 indicates Negative momentum. The RSI at 52.51 is Neutral, neither overbought nor oversold. The STOCH value of 49.22 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	76 Outperform	$6.81B	29.24	19.08%	0.49%	11.83%	11.08%
CECO	75 Outperform	$2.43B	50.06	18.85%	―	29.86%	331.33%
ZWS	72 Outperform	$7.85B	41.77	11.76%	0.80%	6.88%	42.07%
ATMU	71 Outperform	$4.95B	25.31	71.52%	0.39%	3.72%	11.71%
ERII	68 Neutral	$791.93M	43.52	9.41%	―	0.10%	1.50%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
PCT	55 Neutral	$1.69B	-6.85	-147.56%	―	―	12.57%