Zurn Elkay Water Solutions Corp (ZWS) stock analysis

P/E below its 5-year median

Zurn Elkay Water Solutions's P/E of 26.4 is below its own 5-year median of 41.5.

P/E below the industry

Zurn Elkay Water Solutions's P/E of 26.4 is below the General Industrial Machinery and Equipment median of 26.9.

EV/EBITDA below its 5-year median

Zurn Elkay Water Solutions's EV/EBITDA of 19.1 is below its 5-year median of 28.4.

P/B above the industry

Zurn Elkay Water Solutions's price-to-book of 4.43 is above the General Industrial Machinery and Equipment median of 2.84.

Trading below fair value

The share price of $45.44 is below our fair value estimate of $49.26.

Margin of safety under 20%

The price is 7.8% below fair value, less than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew 9.8% a year over the last three fiscal years, short of the 10% we look for.

EPS growing 10%+ a year

Diluted EPS grew 42.2% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 51.1% over the last twelve months, against a 5-year average of 42.0% a year.

Growing slower than the industry

Revenue grew 10.1% over the last twelve months; the General Industrial Machinery and Equipment median is 12.4%.

Guidance lowered

Zurn Elkay Water Solutions lowered its first quarter adjusted EBITDA margins outlook on Feb 3, 2026.

Gross margin improving

Gross margin was 50.4% over the last twelve months, against 44.9% a year earlier.

Return on equity under 15%

Return on equity was 17.7% over the last twelve months and averaged 9.6% over five years; we look for 15% on both.

Return on capital over 10%

Return on invested capital was 16.4%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Zurn Elkay Water Solutions's return on equity of 17.7% is above the General Industrial Machinery and Equipment median of 9.9%.

Earnings grew over 5 years

Net income grew 42.0% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 15.9% over the last twelve months, against a 5-year average of 11.9%.

Net margin above the industry

Zurn Elkay Water Solutions's net margin of 15.9% is above the General Industrial Machinery and Equipment median of 8.0%.

Low debt

Debt is 29.5% of shareholders' equity, under the 40% we consider low.

Debt falling against equity

Debt to equity fell from 101% five years ago to 29.5%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 82.4% of total debt.

Interest well covered

Operating income covers interest expense 16.1 times.

Short-term assets cover short-term debts

Current assets are 2.85 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 4.90; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Zurn Elkay Water Solutions paid dividends worth 1.0% of the share price over the last twelve months.

Yield below Treasuries

The 1.0% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Zurn Elkay Water Solutions yields 1.0%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 5 fiscal years.

Covered by earnings

Dividends take 25.3% of net income.

Cash-flow cover

Needs dividends paid and free cash flow.