Zurn Elkay Water Solutions Corp (NYSE: ZWS)

Sector: Industrials Industry: Pollution & Treatment Controls CIK: 0001439288
Market Cap 8.65 Bn
P/B 5.40
P/E 43.69
P/S 5.10
ROIC (Qtr) 10.25
Div Yield % 0.74
Rev 1y % (Qtr) 9.85
Total Debt (Qtr) 538.50 Mn
Debt/Equity (Qtr) 0.34
Add ratio to table...

About

Zurn Elkay Water Solutions Corp, often referred to as Zurn Elkay, is a growth-oriented company that specializes in the design, procurement, manufacture, and marketing of a comprehensive portfolio of specification-driven water management solutions. The company operates primarily in the construction market, with a focus on institutional and commercial buildings, although it has a smaller presence in the waterworks and residential construction markets. Zurn Elkay's main business activities involve the provision of professional-grade water safety and...

Read more

Investment thesis

Bull case

  • Strong operating cash flow of 346.50M provides robust 0.64x coverage of total debt 538.50M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 300.50M provide 333.89x coverage of short-term debt 900000, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 346.50M provides exceptional 12.12x coverage of interest expenses 28.60M, showing strong debt service capability.
  • Robust free cash flow of 316.60M exceeds capital expenditure of 29.90M by 10.59x, indicating strong organic growth funding capability.
  • Operating cash flow of 346.50M fully covers other non-current liabilities 279.10M by 1.24x, showing strong long-term stability.

Bear case

  • Operating cash flow of 346.50M barely covers its investment activities of (29.90M), with a coverage ratio of -11.59, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 346.50M provides thin coverage of dividend payments of (63.90M) with a -5.42 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of 316.60M represents just -395.75x of debt issuance (800000), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Tax assets of 13.30M provide limited offset against tax liabilities of 189.70M, which is 0.07x, indicating potential future cash flow pressure from tax obligations.
  • Operating cash flow of 346.50M is outpaced by equity issuance of (152M) (-2.28 ratio), indicating concerning reliance on equity markets for funding operations.

Geographical Breakdown of Revenue (2025)

Segments Breakdown of Revenue (2025)

Peer comparison

Companies in the Pollution & Treatment Controls
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 VLTO Veralto Corp 22.76 Bn 26.05 4.31 2.67 Bn
2 ZWS Zurn Elkay Water Solutions Corp 8.65 Bn 43.69 5.10 0.54 Bn
3 FSS Federal Signal Corp /De/ 7.21 Bn 168.93 10.04 0.24 Bn
4 CECO Ceco Environmental Corp 2.77 Bn 53.33 3.85 0.24 Bn
5 PCT PureCycle Technologies, Inc. 1.46 Bn -6.40 258.45 0.43 Bn
6 ERII Energy Recovery, Inc. 0.91 Bn 46.74 6.75 0.00 Bn
7 ADUR Aduro Clean Technologies Inc. 0.33 Bn -23.93 1,516.99 0.00 Bn
8 ARQ Arq, Inc. 0.13 Bn -34.10 1.13 0.03 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 3.33 3.33
EV to Cash from Ops. EV/CFO 25.78 -65.71
EV to Debt EV to Debt 16.59 136.79
EV to EBIT EV/EBIT 30.74 3.75
EV to EBITDA EV/EBITDA 24.30 8.77
EV to Free Cash Flow [EV/FCF] EV/FCF 28.21 2.21
EV to Market Cap EV to Market Cap 1.03 1.03
EV to Revenue EV/Rev 5.27 89.55
Price to Book Value [P/B] P/B 5.40 6.68
Price to Earnings [P/E] P/E 43.69 15.25
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 3.10 1.12
Dividend Payout Ratio % Div Payout % (Qtr) 32.50 3.26
Dividend per Basic Share Div per Share (Qtr) 0.38 0.07
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 20.25 2.56
Interest Coverage Int. cover (Qtr) 10.16 -107.95
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -48.02 -82.15
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 51.77 79.04
Dividend Growth (1y) % Div 1y % (Qtr) 15.15 1.42
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 18.29 -265.30
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 10.42 -75.61
EBIT Growth (1y) % EBIT 1y % (Qtr) 20.34 -272.40
EBT Growth (1y) % EBT 1y % (Qtr) 25.73 -325.95
EPS Growth (1y) % EPS 1y % (Qtr) 25.81 2,177.75
FCF Growth (1y) % FCF 1y % (Qtr) 15.84 -76.02
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 8.18 7.23
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.63 0.42
Cash Payout Ratio Cash Payout (Qtr) 0.17 0.02
Cash Ratio Cash Ratio (Qtr) 1.16 2.16
Current Ratio Curr Ratio (Qtr) 3.13 3.56
Debt to Equity Ratio Debt/Equity (Qtr) 0.34 0.60
Interest Cover Ratio Int Coverage (Qtr) 10.16 -107.95
Times Interest Earned Times Interest Earned (Qtr) 10.16 -107.95
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 22.40 -775.28
EBIT Margin % EBIT Margin % (Qtr) 17.13 -2,721.83
EBT Margin % EBT Margin % (Qtr) 15.44 -2,762.77
Gross Margin % Gross Margin % (Qtr) 45.10 -44.42
Net Profit Margin % Net Margin % (Qtr) 11.70 -2,763.74