Zurn Elkay Water Solutions (ZWS) Is Up 16.9% After Raising Outlook and Reporting Record Margins - Has the Bull Case Changed?

• Zurn Elkay Water Solutions Corporation recently reported strong second quarter 2025 results, delivering core sales of US$444.5 million and growing net income compared to the previous year, while also raising its full-year outlook for core sales and adjusted EBITDA.
• The company’s robust free cash flow, share repurchases, and ongoing supply chain efficiencies highlight management’s confidence and operational discipline amid pricing actions and tariff challenges.
• We’ll explore how the company’s upgraded full-year outlook and record EBITDA margins impact its longer-term investment narrative.

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Zurn Elkay Water Solutions Investment Narrative Recap

For anyone considering Zurn Elkay Water Solutions, the core story centers around belief in the company’s ability to expand margins and grow sales even as supply chains shift away from China and end-market demand remains steady. The latest stronger-than-expected quarterly results and raised full-year outlook reinforce management’s confidence and provide a clear near-term boost. However, these updates do not fully resolve the biggest immediate risk: evolving global tariffs and their uncertain effect on costs and future demand.

Perhaps most relevant to this quarter’s upside is Zurn Elkay’s announcement of record adjusted EBITDA margins at 26.5%, above previous guidance, as well as over US$100 million in free cash flow for the first time. These achievements underscore operating discipline but will be tested if tariff pressures intensify or pricing power fades, underscoring the importance of ongoing initiatives around cost structure and supply chain resilience.

On the other hand, investors should be aware that even with strong execution, persistent tariff volatility could expose margins to...

Read the full narrative on Zurn Elkay Water Solutions (it's free!)

Zurn Elkay Water Solutions is projected to reach $1.8 billion in revenue and $227.0 million in earnings by 2028. This outlook assumes a 4.3% annual revenue growth rate and an earnings increase of $61.1 million from current earnings of $165.9 million.

Uncover how Zurn Elkay Water Solutions' forecasts yield a $38.57 fair value, a 14% downside to its current price.

Exploring Other Perspectives

Simply Wall St Community fair value estimates for Zurn Elkay Water Solutions range from US$29.04 to US$48.46 across 2 views. Despite promising margin expansion, broad tariff uncertainty means opinions on the company’s value and risk profile remain far apart.

Explore 2 other fair value estimates on Zurn Elkay Water Solutions - why the stock might be worth 35% less than the current price!

Build Your Own Zurn Elkay Water Solutions Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Zurn Elkay Water Solutions research is our analysis highlighting 3 key rewards that could impact your investment decision.
• Our free Zurn Elkay Water Solutions research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Zurn Elkay Water Solutions' overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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