Zurn Elkay Water Solutions Corporation Common Stock (ZWS)

FairStock Score: 51/100 — MIXED

Key Financials

Strengths

• Generates $276 million in annual free cash flow (3.2% yield on market cap)
• Strong Piotroski F-Score of 7/9 indicating robust financial health across profitability, leverage, and efficiency metrics
• Solid return on equity of 13.3% above cost of capital
• Conservative balance sheet with debt-to-equity of just 0.34, providing financial flexibility
• Altman Z-Score of 4.8 confirms minimal bankruptcy risk and strong solvency

Concerns

• Trades significantly above Graham Number ($16) with negative 220% margin of safety—limited downside protection

AI Analysis

Zurn Elkay Water Solutions Corporation Common Stock is a small-cap industrials company valued at $8.7 billion. The business generates $1.7 billion in annual revenue with a 3.4% net margin and $276 million in free cash flow. From a quality standpoint, Zurn shows solid Piotroski F-Score of 7/9 and healthy Altman Z-Score of 4.8. On valuation, the stock is commanding a steep 42.9x multiple, with trades far above its Graham Number ($16) with no margin of safety. Growth dynamics show revenue growing at 11.4% and profit growth of 35.1%. Our composite FairStock Score of 51/100 reflects mixed fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Improving fundamentals and sector tailwinds could drive meaningful earnings growth, compressing the effective multiple for patient investors. With $276 million in annual free cash flow (3.2% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 43x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer