tiprankstipranks
Trending News
More News >
Zurn Water Solutions (ZWS)
NYSE:ZWS

Zurn Water Solutions (ZWS) AI Stock Analysis

Compare
135 Followers

Top Page

ZW

Zurn Water Solutions

(NYSE:ZWS)

Rating:78Outperform
Price Target:
$41.00
▲(12.27%Upside)
Zurn Water Solutions demonstrates robust financial performance with strong revenue growth and profitability, which is the primary driver of its overall score. Technical analysis supports a stable upward trend, while valuation indicators suggest a somewhat high price. The earnings call provided reassurance about the company's strategic direction amidst challenges. Corporate events contribute positively by enhancing governance. The overall score reflects a balance of strong financial health and strategic initiatives against valuation concerns.
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 (ZWS) vs. SPDR S&P 500 ETF (SPY)

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 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 Earnings Call Summary

Earnings Call Date:Apr 22, 2025
(Q1-2025)
|
% Change Since: 17.58%|
Next Earnings Date:Jul 29, 2025
Earnings Call Sentiment Neutral
The earnings call presented a balanced view of strong financial performance and strategic supply chain adjustments against challenges posed by tariffs and some market softness.
Q1-2025 Updates
Positive Updates
Strong Organic Growth and Improved Margins
Zurn Elkay Water Solutions reported a 5% organic growth and 110 basis points year-over-year improvement in EBITDA margins, indicating strong operational performance.
Share Repurchase and Low Leverage
The company ended the quarter with a leverage ratio below one at 0.9 times and repurchased $77 million worth of shares, demonstrating strong financial health and shareholder return.
Sustainability Achievements
The company was recognized for its sustainability efforts, delivering 600 million gallons of filtered water in Q1, a 33% increase over the prior year.
Supply Chain Resilience
Zurn Elkay has significantly reduced its dependence on China, with plans to have less than 2-3% of COGS from China by the end of 2026, showcasing strategic supply chain management.
Negative Updates
Tariff Impacts and Supply Chain Challenges
The company faces potential cost increases due to tariffs, with an estimated $45 million to $55 million impact on 2025 costs, and concerns about future tariff adjustments.
Softness in Residential and Commercial Segments
While non-residential markets showed mid-single-digit growth, there was softness in residential and certain pockets of the commercial segment.
Company Guidance
During the call, Zurn Elkay Water Solutions Corporation provided several key metrics and guidance for the first quarter of the fiscal year 2025. The company reported a 5% organic growth and a 110 basis points year-over-year improvement in EBITDA margins. First quarter sales totaled $389 million, with a 5% core growth and a reported growth of 4%, influenced by currency effects. Adjusted EBITDA was $98 million, with margins expanding to 25.2%. The company ended the quarter with a net debt leverage of 0.9 times, inclusive of $77 million deployed for share repurchases. For the second quarter, Zurn Elkay anticipates core sales growth in the low to mid-single digits and expects adjusted EBITDA margins to range between 25.5% and 26%. The company remains confident in its ability to manage the tariff impacts through supply chain adjustments and price increases, aiming to maintain a price-cost positive position. Despite the challenges, the company affirmed its full-year guidance, emphasizing its robust supply chain strategy and competitive positioning.

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
85
Very Positive
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
78
Positive
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
82
Very Positive
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
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
1.58B1.57B1.53B1.28B910.90M562.70M
Gross Profit
703.10M707.00M589.40M465.50M373.20M253.30M
EBIT
255.50M244.60M218.10M107.10M107.00M81.00M
EBITDA
343.40M328.40M306.00M180.60M188.70M147.50M
Net Income Common Stockholders
169.50M160.20M112.70M61.70M49.70M35.00M
Balance SheetCash, Cash Equivalents and Short-Term Investments
144.70M198.00M136.70M124.80M96.60M62.30M
Total Assets
2.61B2.65B2.67B2.86B1.08B3.40B
Total Debt
556.90M551.60M543.20M570.10M539.50M0.00
Net Debt
412.20M353.60M406.50M445.30M442.90M-62.30M
Total Liabilities
1.06B1.06B1.06B1.25B951.30M1.96B
Stockholders Equity
1.55B1.59B1.60B1.61B126.40M1.44B
Cash FlowFree Cash Flow
260.10M271.70M232.60M89.40M200.30M168.00M
Operating Cash Flow
282.50M293.50M253.90M97.00M223.60M196.30M
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
Positive
Last Price36.52
Price Trends
50DMA
33.80
Positive
100DMA
34.88
Positive
200DMA
35.57
Positive
Market Momentum
MACD
0.57
Positive
RSI
57.25
Neutral
STOCH
62.45
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 36.52 is above the 20-day moving average (MA) of 36.46, above the 50-day MA of 33.80, and above the 200-day MA of 35.57, indicating a bullish trend. The MACD of 0.57 indicates Positive momentum. The RSI at 57.25 is Neutral, neither overbought nor oversold. The STOCH value of 62.45 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 2 New Risks
1.
Our inability to achieve our sustainability strategy goals and targets could adversely impact our business, financial condition, results of operations or cash flows. Q4, 2024
2.
Artificial intelligence presents challenges that can impact our business by posing security risks to confidential or proprietary information and personal data. Q4, 2024

Zurn Water Solutions Peers Comparison

Overall Rating
UnderperformOutperform
Sector (66)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
ZWZWS
78
Outperform
$6.14B37.3410.49%0.96%3.22%38.39%
FSFSS
78
Outperform
$6.05B29.0618.78%0.52%7.85%15.78%
75
Outperform
$923.67M20.2318.34%8.89%278.44%
74
Outperform
$3.01B16.4495.48%0.41%1.43%12.88%
66
Neutral
$4.51B12.295.40%248.53%4.14%-12.41%
64
Neutral
$688.33M34.6610.35%10.93%6.99%
PCPCT
38
Underperform
$1.77B-67.71%-180.10%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
ZWS
Zurn Water Solutions
36.59
6.75
22.62%
CECO
Ceco Environmental
26.19
2.99
12.89%
ERII
Energy Recovery
12.72
-0.91
-6.68%
FSS
Federal Signal
99.26
14.95
17.73%
PCT
PureCycle Technologies
10.82
5.16
91.17%
ATMU
Atmus Filtration Technologies, Inc.
36.38
7.23
24.80%

Zurn Water Solutions Corporate Events

Executive/Board ChangesShareholder Meetings
Zurn Water Solutions Holds Annual Stockholders Meeting
Positive
May 2, 2025

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.

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.