Value
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.5 |
| P/S | 7.3 |
| EV/EBITDA | 1.7 |
| Fwd P/E | 5.6 |
| PEG | 5.0 |
| Analyst target | 6.0 |
- ▸Forward P/E: 23.1x
- ▸PEG: 1.53
ZWS · Why this verdict
Why Zurn Elkay Water Solutions (ZWS) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.9/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Zurn Elkay Water Solutions delivers a perfect 4-for-4 earnings beat streak, a maximum Piotroski F-Score of 9/9, and 129% free cash flow conversion — but the stock has already reached its analyst price target with only 0.2% upside remaining, making the current entry a near-zero reward-to-risk proposition.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Zurn Elkay has beaten earnings estimates in all 4 of the last 4 quarters with an average positive surprise of 11.2%, and converts 129% of net income into free cash flow — indicating the business consistently generates more cash than accounting earnings reflect and sets conservative guidance. Earnings | Earnings beat rate remains above 75% over the next 4 quarters, and free cash flow conversion stays above 100% of net income. | →Stable |
| CounterA 4-quarter beat streak at the current valuation may have already been priced in, with the market's lack of upside gap to the analyst target reflecting full pricing of the beat expectation into the stock. | ||
Zurn Elkay achieves the maximum Piotroski F-Score of 9/9, a current ratio of 9.8, and a moat score of 6.9 — indicating a financially healthy water solutions business with strong balance sheet discipline and a recognized competitive advantage in a niche industrial market. Quality breakdown | Piotroski F-Score remains at 8 or above for the next 4 quarters, confirming the financial health advantage is durable. | →Stable |
| CounterA forward P/E of 25.4x and PEG ratio of 1.71 suggest the market already prices the quality premium fully; the high quality score does not by itself provide a margin of safety at current prices. | ||
The current price of $48.83 is within $0.08 of the analyst consensus target of $48.91 — effectively at the price ceiling — producing an asymmetry ratio of 0.03 and a reward-to-risk ratio of just 0.04, making the risk-reward among the worst possible configurations for a new entry. Targets | Analyst consensus price target rises above $55, exceeding the current price by more than 12%, providing a renewed basis for continued accumulation. | ↑Improving |
| CounterStrong momentum indicators (golden cross, above all moving averages, MACD bullish) suggest near-term price momentum could carry the stock above the analyst target temporarily; the technical setup may support a breakout. | ||
Zurn Elkay shows a golden cross technical setup with RSI at 50, MACD bullish, and volume accumulation via a rising on-balance volume indicator — combined with 7.4/10 growth score driven by earnings growth of 9.4% — indicating the business is growing and the technical structure supports the trend. Momentum breakdown | Earnings growth rate remains above 8% annually for the next 2 reported years, and the golden cross setup holds without a death-cross reversal. | Tripped↓Deteriorating |
| CounterAn RSI of 50 is mid-range with no directional commitment; at the analyst target price, buyers and sellers are in equilibrium and a single miss could break the golden cross. | ||
Zurn Elkay has beaten earnings estimates in all 4 of the last 4 quarters with an average positive surprise of 11.2%, and converts 129% of net income into free cash flow — indicating the business consistently generates more cash than accounting earnings reflect and sets conservative guidance.
→StableEarnings
- Expectation
- Earnings beat rate remains above 75% over the next 4 quarters, and free cash flow conversion stays above 100% of net income.
CounterA 4-quarter beat streak at the current valuation may have already been priced in, with the market's lack of upside gap to the analyst target reflecting full pricing of the beat expectation into the stock.
Zurn Elkay achieves the maximum Piotroski F-Score of 9/9, a current ratio of 9.8, and a moat score of 6.9 — indicating a financially healthy water solutions business with strong balance sheet discipline and a recognized competitive advantage in a niche industrial market.
→StableQuality breakdown
- Expectation
- Piotroski F-Score remains at 8 or above for the next 4 quarters, confirming the financial health advantage is durable.
CounterA forward P/E of 25.4x and PEG ratio of 1.71 suggest the market already prices the quality premium fully; the high quality score does not by itself provide a margin of safety at current prices.
The current price of $48.83 is within $0.08 of the analyst consensus target of $48.91 — effectively at the price ceiling — producing an asymmetry ratio of 0.03 and a reward-to-risk ratio of just 0.04, making the risk-reward among the worst possible configurations for a new entry.
↑ImprovingTargets
- Expectation
- Analyst consensus price target rises above $55, exceeding the current price by more than 12%, providing a renewed basis for continued accumulation.
CounterStrong momentum indicators (golden cross, above all moving averages, MACD bullish) suggest near-term price momentum could carry the stock above the analyst target temporarily; the technical setup may support a breakout.
Zurn Elkay shows a golden cross technical setup with RSI at 50, MACD bullish, and volume accumulation via a rising on-balance volume indicator — combined with 7.4/10 growth score driven by earnings growth of 9.4% — indicating the business is growing and the technical structure supports the trend.
Tripped↓DeterioratingMomentum breakdown
- Expectation
- Earnings growth rate remains above 8% annually for the next 2 reported years, and the golden cross setup holds without a death-cross reversal.
CounterAn RSI of 50 is mid-range with no directional commitment; at the analyst target price, buyers and sellers are in equilibrium and a single miss could break the golden cross.
Per-dimension breakdown
Quality
7.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 5.6 |
| ROA | 5.8 |
| Gross margin | 5.8 |
| Op margin | 10.0 |
| Net margin | 7.7 |
| Current ratio | 9.9 |
| FCF quality | 7.8 |
| Moat | 6.9 |
| Piotroski F | 10.0 |
- ▸Strong margins: 15%
- ▸Strong Piotroski F-Score: 9/9
- ▸High-quality business
Growth
7.5/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.1 |
| EPS growth | 10.0 |
Momentum
1.9/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.0 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 2.2 |
| Volume | 3.3 |
- ▸Capitulation risk (RSI 27, below 200MA)
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA but MA still rising (+1.1%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.9 |
| Price target | 7.9 |
| erm sentiment | 4.9 |
- ▸Light analyst coverage (9.0) — signal dampened
- ▸Analyst upside: 22%
Insider
4.2/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 4.6 |
| notable moves | 3.0 |
- ▸Insider selling (low materiality) — $1,325,500 (0.017% of mkt cap)
Peer rank
4.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.7 |
| quality rank | 5.8 |
| growth rank | 4.0 |
Technical
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 7.8 |
| support resistance | 7.9 |
| 52w position | 7.4 |
| gap | 5.0 |
Risk (lower is worse)
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.1 |
| days to cover | 6.0 |
| volatility | 7.6 |
| put call | 8.9 |
| implied vol | 4.3 |
| beta | 8.3 |
| debt equity | 8.7 |
- ▸Concentration risks: 2 MED (10-K Item 1A)
Catalyst
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 6.7 |
| dividend safety | 8.0 |
- ▸Perfect beat streak: 4Q
- ▸Dividend aristocrat: 0.9% yield
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (5)
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:54d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:1.9<4.5
- ASYMMETRY:1.3<1.5@spot
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
1.27
Upside
+6.4%
Downside
5.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeTemporary headwind — High quality (7.7) with weak momentum (1.9)
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.4 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Quality at 7.7) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:1.9<4.5, ASYMMETRY:1.3<1.5@spot) reinforce the read. Current asymmetry R:R is 1.27 — supplementary context, not the trigger for this path.
The strongest dimensions are Quality at 7.7, Growth at 7.5, and Risk (lower is worse) at 7.4; the weakest are Momentum at 1.9, Insider at 4.2, and Peer rank at 4.6. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of 1.27 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Perfect Earnings Beat Fcf Conversion
Trip ifEPS surprise falls below 0% in at least 2 of the next 4 quarters, or free cash flow conversion drops below 80% of net income.
- P2Maximum Piotroski Score Quality
Trip ifPiotroski F-Score falls below 7/9 for 2 consecutive quarters.
- P3Analyst Target Exhausted Zero Upside
Trip ifAnalyst consensus price target declines below $43, falling more than 12% below the current $48.91.
- P4Strong Growth Momentum SetupTripped
Trip ifPrice drops below $44, falling more than 9% below the current $48.83, and RSI declines below 35.