Zurn Elkay Water Solutions Corporation
Orin's own judgment of how firmly the evidence points one way — not the chance the price goes up.
Zurn Elkay remains a hold heading into its Q3 2026 earnings release, as the sharp revenue deceleration in Q2 2026 (quarter ended 30 Jun)—revenue of $442.2M, flat at -0.5% YoY versus +11.4% in Q1 2026 and +7.9% in Q2 2025—has not yet been resolved, while the stock trades at a P/E of 28.5 (48% above the peer median of 19.3) and EV/EBITDA of 20.2 (69% above the peer median of 12.0).
The Q2 2026 EPS of $0.67 versus $0.30 in Q2 2025 is misleading because operating income was essentially flat at $77.1M versus $77.6M, meaning the net income surge to $113.3M was driven by a non-operating item rather than core earnings power. With net insider selling of $971.9M over 24 months, a smart money score near zero at 0.00 as of Q2 2026, and the stock below both its 50-day ($47.76) and 200-day ($48.26) moving averages, the premium valuation is difficult to justify unless Q3 2026 demonstrates revenue reacceleration.
What could go wrong
- Revenue growth stall persists. Q2 2026 revenue went flat at -0.5% YoY after three consecutive quarters of 8–11% growth; if this reflects end-market softening rather than a one-quarter anomaly, the premium multiple compresses sharply.
- Valuation premium unwinds. P/S of 4.49 is 111% above the peer median of 2.13 and P/E of 28.5 is 48% above the peer median of 19.3; any disappointment in Q3 2026 earnings could trigger a de-rating toward peers.
- Persistent insider selling. Over 24 months, insiders net sold $971.9M in shares with 57 dispositions versus 1 acquisition; the CAO sold 25,000 shares at $53.02 on 4 Aug, signaling limited insider confidence at current levels.
- Non-operating income distortion. Q2 2026 net income of $113.3M versus $50.5M in Q2 2025 occurred despite flat operating income ($77.1M vs $77.6M), indicating the EPS beat was not driven by core operations and may not be sustainable.
What would change my mind
Where this comes from: quarterly results · peer comparison · insider trades · technicals. Orin's read on ZWS; not advice.
How has the share price moved?
Up 5.4% over twelve months, from $46.62 on 27 Oct 2025 to $49.15 at the Tue 27 Oct 2026 close. Its highest close in that time was $53.18 on 4 Aug 2026; the last close is 7.6% below it.
- Green line: the closing price each trading day.
- Grey line: the average closing price over the last 50 trading days.
- Dashed amber line: the same over the last 200 trading days — a slower, smoother line.
- Bars along the bottom: shares traded each day — green when it closed higher than the day before, rose when lower (the most, 4.4M, on 26 Jun 2026).
- Flags: the company's filings, on the day they were made (a 10-Q is the quarterly report and a 10-K the annual report; an 8-K reports a major event).
- Rose flags: large share sales by the company's own officers and directors, from the Form 4 each one files after trading.
On file
All ZWS filingsLargest holders · 13F Q2 2026
Money flow| Filer | Position | Of fund |
|---|---|---|
| BlackRock | $1.2B | 0.0% |
| Vanguard Portfolio Management | $454.2M | 0.0% |
| Vanguard Capital Management | $354.4M | 0.0% |
| State Street | $302.5M | 0.0% |
| Bank of America | $278.2M | 0.0% |
| Invesco | $234.9M | 0.0% |
| Geode Capital Management | $194.2M | 0.0% |
| T. Rowe Price Associates | $139.3M | 0.0% |
| AllianceBernstein | $136.6M | 0.0% |
| Nomura Asset Management International | $115.4M | 0.2% |
70 of the 815 filers we track · quarter ended Q2 2026 · positions, not flows
Insiders, last 24 months: 153 Form 4 filings; open-market trades net −$953.2M. Of the 50 on hand, 1 was an open-market purchase and 19 sales — the rest are grants, option exercises and tax withholding.
Ask Orin about ZWS
Orin answers questions about ZWS from its filings, transcripts and numbers — with the source behind every claim. Your own desk starts with 3 free days, card required.
Start 3 free days →How is it priced, against its own past and its sector?
Priced at 28.2× its last 12 months of profit (Tue 27 Oct close) — lower than in all 5 of its last 5 fiscal years (middle 40.8×); the typical Industrials company on the NYSE is at 33.7×.
| Measure | Now | Its usual | Sector |
|---|---|---|---|
| P/E | 28.2×below usual | 40.8× | 33.7× |
| P/S | 4.59×above usual | 4.09× | — |
| EV/EBITDA | 21.1×near usual | 21.7× | — |
| P/B | 4.8× | — | — |
- P/B: no usual level — it ran from 2.0× to 35.0× over its last 5 fiscal years, so a middle value says little.
- "Its usual" is the middle of its own last 5 fiscal years.
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
P/S: the company's total market value divided by one year of revenue. Used when there is no profit to measure.
EV/EBITDA: the price of the whole company (its shares plus its debt, minus its cash) divided by one year of operating profit before interest, tax and write-downs.
P/B: the share price divided by the book value per share — what the company owns minus what it owes, as its accounts record it. When book value is tiny, P/B swings wildly and says little.
What do the analysts who cover it publish?
The analysts' average 12-month price target is $59.20 (from $55 to $62) — 20% above the Tue 27 Oct close price. That is their published opinion, not Orin's.
$59.20
$55 – $62 · +20% against the last close
- 3 buy or overweight
- 2 hold
- 0 underweight or sell
Price target: the share price an analyst publishes for about 12 months ahead. It is the opinion of the firm that wrote it; the average is across the firms that cover the company.
Overweight / underweight: analysts' rating words: overweight means the firm expects the stock to do better than the others it covers, underweight worse. Their words, not Orin's.
How is it priced next to the companies it is compared to?
Priced at 28.2× its last 12 months of profit; the middle P/E of the 7 companies it is compared to that made a profit is 19.7×.
| Company | Market value | P/E | EV/EBITDA | Gross margin | Net margin | ROE |
|---|---|---|---|---|---|---|
| ZWSZurn Elkay Water Solutions Corporation | $8B | 28.2× | 21.1× | 47.1% | 16.3% | 18% |
| AOSA. O. Smith Corporation | $8B | 17.3× | 11.8× | 38.6% | 13.1% | 27% |
| FBINFortune Brands Innovations, Inc. | $5B | 35.0× | 17.4× | 45.6% | 3.4% | 6% |
| MWAMueller Water Products, Inc. | $4B | 17.2× | 10.8× | 37.9% | 15.0% | 20% |
| NWPXNWPX Infrastructure, Inc. | $962M | 19.7× | 12.2× | 20.9% | 8.5% | 12% |
| PNRPentair plc | $10B | 16.4× | 12.7× | 41.2% | 15.4% | 16% |
| WTSWatts Water Technologies, Inc. | $12B | 26.0× | 17.0× | 50.5% | 16.0% | 21% |
| XYLXylem Inc. | $22B | 20.5× | 16.9× | 39.3% | 15.7% | 10% |
- The list of companies is the data vendor's choice, so it can include a company a person would not have picked.
Market value: the share price times the number of shares — what the whole company is priced at.
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
EV/EBITDA: the price of the whole company (its shares plus its debt, minus its cash) divided by one year of operating profit before interest, tax and write-downs.
Gross margin: the share of each $1 of sales left after the direct cost of making what was sold.
Net margin: the share of each $1 of sales kept as profit after every cost. Below zero, the company lost money.
ROE: return on equity: one year of profit as a share of the shareholders' money in the business (its book value).
Is it priced high or low compared with its own past?
Priced at 28.2× its last 12 months of profit (Tue 27 Oct close). It has no full fiscal year on file since its history starts, so there is nothing of its own to compare with.
- Now28.2×
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
Fiscal year (FY): the company's own 12-month accounting year, which need not match the calendar year.
How has its sector been priced?
Industrials companies on the NYSE were priced at a typical 33.7× their yearly profit (Tue 27 Oct close).
- Now33.7×
- Each year is the middle of that calendar year's daily sector P/E; "Now" is the Tue 27 Oct close figure, the same one in the table above.
Sector P/E: the middle P/E of the companies in the same sector on the same stock exchange, as the data vendor works it out each day.
What does a cash-flow model say a share is worth?
A standard cash-flow model puts it at $50 a share — 1% above the $49.30 price it was computed against (27 Oct).
| Model | Value a share | Against the price then |
|---|---|---|
| Standard | $50 | 1% above $49.30 |
| Levered | $40 | 20% below $49.30 |
Discounted cash flow: a model's estimate of what the company is worth today, from the cash it is forecast to make in future years. Small changes in the forecast move it a lot, and it says little about a company that loses money.
Standard / levered: two versions of the cash-flow model: the standard one counts the cash before the company pays its lenders, the levered one after.