Zurn Elkay Water Solutions Corporation (ZWS) Market Cap

Zurn Elkay Water Solutions Corporation (ZWS) has a market capitalization of $8.38B, based on the latest available market data.

Financials updated after earnings reported 2025-12-31.

Sector: Industrials
Industry: Industrial - Pollution & Treatment Controls
Employees: 2500
Exchange: New York Stock Exchange
Headquarters: Milwaukee, WI, US
Website: https://zurnwatersolutions.com

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📘 ZURN ELKAY WATER SOLUTIONS CORP (ZWS) — Investment Overview

🧩 Business Model Overview

Zurn Elkay Water Solutions Corp (ZWS) is a leading provider of mission-critical water management solutions designed to deliver clean water, ensure efficient usage, and support hygiene and safety in commercial, institutional, and industrial environments. The company’s portfolio encompasses a range of products and systems that include water control and safety solutions, hygienic and environmental water fixtures, and drinking water delivery systems. ZWS focuses on the non-residential market verticals, serving customers such as schools, hospitals, office buildings, manufacturing facilities, and public infrastructure projects. Through both organic innovation and strategic acquisitions, ZWS has built an extensive catalog of products under well-recognized brands, establishing itself as a foundational supplier in the broader water solutions industry.

💰 Revenue Streams & Monetisation Model

ZWS generates revenue predominantly through the sale of engineered water management and drinking water solutions. Its revenue streams are anchored in several product categories:
  • Water Safety and Control: This segment includes backflow preventers, pressure regulators, thermostatic mixing valves, and various plumbing fixture fittings aimed at protecting public water supply and ensuring regulatory compliance.
  • Drinking Water Solutions: This includes water coolers, bottle filling stations, filtered water dispensers, and related components, increasingly popular in institutions prioritizing sustainability and hygiene.
  • Specialty Products: The company also offers flush valves, sensor-operated fixtures, and drainage systems tailored for commercial and institutional applications.
Revenue comes from both replacement parts and new construction projects, providing a balance between cyclical (construction-driven) and recurring (maintenance and upgrade-driven) income. Distribution is achieved through plumbing wholesalers, distributors, and direct sales to end-users and contractors.

🧠 Competitive Advantages & Market Positioning

ZWS benefits from several durable competitive advantages:
  • Brand Recognition and Trust: The company’s legacy brands, including Zurn and Elkay, are well-established in the water management industry, known for reliability and regulatory compliance. This reputation is particularly valuable in sectors where water safety and quality are critical.
  • Regulatory Adherence: ZWS’s solutions are designed to meet and often exceed municipal, state, and federal plumbing and water safety codes, making them preferred choices in both new construction and retrofit markets.
  • Broad Product Portfolio: The company addresses a wide swath of customer needs – from touchless fixtures (enhancing hygiene post-pandemic) to advanced filtration technologies amid rising concern about water quality. Its capabilities extend across both core plumbing and specialized water delivery.
  • Distribution Network: ZWS enjoys entrenched relationships with wholesalers, architects, engineers, and contractors, giving it access to key decision-makers in commercial and institutional projects.
  • Innovation and ESG-alignment: The company focuses on developing products that reduce water consumption and plastic waste, resonating with customers’ sustainability priorities and regulatory shifts.

🚀 Multi-Year Growth Drivers

ZWS stands to benefit from a constellation of secular trends that support long-term demand:
  • Growing Emphasis on Water Quality & Access: Increasing attention on public health, lead removal, water filtration, and touchless fixtures in schools, healthcare, and offices is expanding the addressable market.
  • Sustainability & ESG Demands: Policies and customer preferences are shifting towards solutions that enable water conservation and reduce single-use plastics. ZWS’s bottle filling stations and water-efficient fixtures are directly aligned with these themes.
  • Infrastructure Investment: Government and private sector spending on infrastructure upgrades, especially in educational, healthcare, and municipal facilities, boosts demand for ZWS’s wide-ranging product suite.
  • Regulatory Tailwinds: Tightening plumbing and water safety codes require continual updates and retrofits, which supports recurring demand for ZWS’s code-compliant products.
  • Health & Hygiene Trends: Lasting behavioral changes around hygiene and occupant wellness in public and commercial spaces continue to drive adoption of hands-free, filtered, and antimicrobial drinking water solutions.
  • Leverage of Aftermarket & Replacement: A significant portion of ZWS’s business is derived from maintenance, upgrades, and replacement, providing a steady stream of revenue that is less reliant on new-build cycles.
  • Strategic M&A: The company continues to augment its portfolio and market reach through disciplined acquisitions of complementary businesses or technologies.

⚠ Risk Factors to Monitor

Investors should note several risk variables associated with an investment in ZWS:
  • Cyclical Exposure: The company’s performance can be influenced by non-residential construction activity, which is sensitive to macroeconomic conditions and government budget cycles.
  • Regulatory Changes: Tightening water or plumbing codes benefit ZWS, but unexpected regulatory shifts or the emergence of alternative compliance solutions could potentially disrupt demand.
  • Competitive Pressure: The water solutions market remains fragmented with several large players and nimble niche competitors, putting pressure on pricing and innovation velocity.
  • Supply Chain and Commodity Risks: ZWS is exposed to fluctuations in the cost and availability of raw materials (e.g., copper, steel) and global supply chain disruptions that can affect manufacturing lead times and margins.
  • Integration Risks: The company’s growth-by-acquisition strategy exposes it to potential challenges in integrating acquired businesses and realizing anticipated synergies.
  • Litigation and Liability: As a supplier of water filtration and safety devices, ZWS could be subject to product liability risks or costly recalls in instances of product failure.

📊 Valuation & Market View

The investment community typically values ZWS using a blend of earnings-based (P/E, EV/EBITDA), revenue-based, and cash flow metrics, benchmarking its multiples against peers in the building products, water technology, and industrial sectors. While ZWS may trade at a premium reflecting its strong brand, recurring revenue component, and exposure to secular ESG trends, analysts may also adjust valuation multiples to reflect the company’s historically stable margins, recurring aftermarket business, and ability to generate free cash flow. Market participants generally view ZWS as a high-quality industrial name with leverage to infrastructure investment, secular water quality and health trends, and ESG flows. The long-term investment case is bolstered by margin resilience, visible replacement business, and the capacity for further portfolio-accretive M&A. However, valuation multiples can be sensitive to macro construction cycles, regulatory risk perceptions, and execution of integration strategies.

🔍 Investment Takeaway

Zurn Elkay Water Solutions Corp offers investors exposure to the vital and enduring market for commercial and institutional water management and delivery systems. With durable brand equity, a comprehensive and regulatory-compliant product set, and a well-developed aftermarket and replacement business, ZWS appears well positioned to benefit from multi-year secular trends in water quality, health, and sustainability. The company’s ability to lean into ESG-driven demand — alongside recurring revenue from maintenance and upgrades — adds a layer of resilience not always present in other industrials with construction exposure. Key growth vectors include infrastructure renewal, evolving hygiene standards, and regulatory upgrades, with additional upside potential from thoughtful portfolio expansion. As with all companies in the sector, investors must monitor risks tied to cyclicality, cost inflation, competitive dynamics, and integration efficacy. Overall, given its defensible positioning and alignment with pressing societal water needs, ZWS represents a compelling candidate for those seeking participation in the global transformation of water infrastructure.

⚠ AI-generated — informational only. Validate using filings before investing.

📢 Show latest earnings summary

ZWS Q4 2025 Earnings Summary

Overall summary: Zurn Elkay delivered a strong Q4 with double-digit core growth, margin expansion, and robust free cash flow, capping a year of improved profitability and record-low leverage. Management guided to mid-single-digit core growth in 2026 with ~35% incremental margins and higher price benefit in H1, underpinned by supply chain optimization and a disciplined ZEBS-driven execution. The team is pursuing North America–focused adjacencies and maintaining an active M&A funnel, while monitoring tariff and commodity cost uncertainties. Overall tone is confident with an eye on disciplined risk management and another record year in 2026.

Growth

  • Q4 core sales +10% YoY to $407M; adjusted EBITDA +14% to $104M with margin +100 bps to 25.6%
  • Full-year 2025 core sales +8% with adjusted EBITDA margin +120 bps YoY
  • Nonresidential outpaced residential; pockets of commercial softness; growth initiatives drove above-outlook performance
  • Q1 2026 core sales guide +7% to +8%; full-year 2026 core sales +mid-single digits
  • Tariff-related pricing contributed ~5 pts to Q4 growth; price carryover expected to be higher in H1 2026

Business development

  • Identified adjacencies and underserved verticals in North America around water/professional-grade plumbing; plan to build portfolios leveraging existing products (analogous to prior fire protection expansion)
  • Active M&A cultivation; no missed transactions; adjacency work expected to enhance M&A pipeline
  • Launched Pro Filtration bottle filling stations and Liv EZ filtration for residential/commercial settings
  • Introduced SANITIZE + DRY hand dryer with cold plasma hygiene technology
  • Partnered with TerraCycle to recycle used water filters

Financials

  • Q4 sales $407M (+10% YoY); adjusted EBITDA $104M; margin 25.6% (+100 bps YoY)
  • Q4 free cash flow $83M; full-year FCF $317M (+17% YoY)
  • 2025 sales +$129M and adjusted EBITDA +$52M YoY (~40% drop-through)
  • 2026 guidance: incremental adjusted EBITDA margins ~35%; free cash flow ≈$335M
  • Q1 2026 EBITDA margin expected ~25.5%–26% (~+60 bps YoY)
  • Q4 price/cost positive; ~5 points of price from tariff-related actions

Capital & funding

  • Net leverage 0.4x (lowest as a public company)
  • Repurchased ~$160M of shares in 2025 (~3% of shares) at ~$36.74 average; $25M in Q4
  • Paid $64M in dividends in 2025
  • Strong cash generation supports continued buybacks, dividend and potential M&A

Operations & strategy

  • Supply chain optimization executed effectively; ongoing cost reductions as new supply base scales
  • Exiting direct material purchases from China; targeting only a few points of COGS from China by end-2026; some products ahead of schedule
  • ZEBS continuous improvement driving productivity; #CI submissions up 49% to 5,568 in 2025
  • Completed annual 3-year strategic planning; deploying year 1 in 2026 to exploit competitive advantages and drive organic growth

Market & outlook

  • 2026 end-market assumptions: institutional and waterworks +LSD; commercial flattish; residential tougher; overall flat to slightly positive
  • Tariff framework assumed unchanged in 2026; expect positive dollar price/cost from tariffs again
  • Price impact heavier in H1 2026; laps tariff-related pricing in H2
  • Management aiming for another record year in 2026; January start characterized as strong

Risks & headwinds

  • Uncertainty around tariff policies and rates
  • Metals inflation and general input cost pressures
  • Residential market weakness and pockets of commercial softness
  • Execution risk entering adjacencies and in continuing supply chain transition away from China

Sentiment: positive

📊 Zurn Elkay Water Solutions Corporation (ZWS) — AI Scoring Summary

📊 AI Stock Rating — Summary

ZWS reported a revenue of $407.2 million and a net income of $42.1 million for the quarter ending December 31, 2025. The EPS was $0.25, reflecting a net margin of approximately 10.3%. The company generated $91.7 million in operating cash flow, with a free cash flow of $82.5 million. Year-over-year growth in key metrics indicates positive business momentum. The company's balance sheet is strong, with $2.68 billion in total assets and net debt of $280 million. ZWS demonstrates consistent revenue growth supported by robust cash flows. Profitability is evidenced by a healthy net margin and stable EPS. The company managed to produce a substantial free cash flow, indicating effective liquidity management. Despite a net debt of $280 million, the debt-to-equity ratio remains conservative, highlighting financial resilience. Dividend payments and share buybacks enhance shareholder value. The dividend yield is competitive, considering recent increases in payout amounts. Analyst sentiment reflects optimism, with a median price target of $53 and a consensus of $52.6, suggesting fair value appreciation potential. Overall, ZWS presents a balanced growth and value proposition driven by operational efficiency and strong financial health.

AI Score Breakdown

Revenue Growth — Score: 8/10

Revenue grew to $407.2 million, driven by stable demand and strategic initiatives.

Profitability — Score: 8/10

Net margin at 10.3% and solid EPS performance reflect efficient cost management.

Cash Flow Quality — Score: 9/10

Strong free cash flow generation of $82.5 million supports liquidity and operations.

Leverage & Balance Sheet — Score: 7/10

Net debt of $280 million is manageable with a solid balance sheet and equity position.

Shareholder Returns — Score: 9/10

Consistent dividends and strategic buybacks enhance long-term shareholder value.

Analyst Sentiment & Valuation — Score: 8/10

Positive analyst sentiment with a fair valuation and room for price appreciation.

⚠ AI-generated — informational only, not financial advice.

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