Have you been paying attention to shares of Zurn Water (ZWS)? Shares have been on the move with the stock up 6.8% over the past month. The stock hit a new 52-week high of $38.8 in the previous session. Zurn Water has gained 30.8% since the start of the year compared to the 11.7% move for the Zacks Industrial Products sector and the 13.5% return for the Zacks Manufacturing – Electronics industry.
The stock has an impressive record of positive earnings surprises, as it hasn’t missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 29, 2024, Zurn Water reported EPS of $0.34 versus consensus estimate of $0.32.
For the current fiscal year, Zurn Water is expected to post earnings of $1.24 per share on $1.56 billion in revenues. This represents a 27.84% change in EPS on a 2.09% change in revenues. For the next fiscal year, the company is expected to earn $1.35 per share on $1.62 billion in revenues. This represents a year-over-year change of 8.9% and 3.77%, respectively.
Zurn Water may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Zurn Water has a Value Score of C. The stock’s Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 31X current fiscal year EPS estimates, which is a premium to the peer industry average of 24.5X. On a trailing cash flow basis, the stock currently trades at 25.6X versus its peer group’s average of 23.1X. Additionally, the stock has a PEG ratio of 1.95. This isn’t enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to consider the stock’s Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Zurn Water currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Zurn Water passes the test. Thus, it seems as though Zurn Water shares could have a bit more room to run in the near term.
Shares of ZWS have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Eaton Corporation, PLC (ETN). ETN has a Zacks Rank of # 2 (Buy) and a Value Score of C, a Growth Score of C, and a Momentum Score of B.
Earnings were strong last quarter. Eaton Corporation, PLC beat our consensus estimate by 1.43%, and for the current fiscal year, ETN is expected to post earnings of $12.10 per share on revenue of $25.06 billion.
Shares of Eaton Corporation, PLC have gained 0.6% over the past month, and currently trade at a forward P/E of 31.3X and a P/CF of 29.4X.
The Manufacturing – Electronics industry may rank in the bottom 66% of all the industries we have in our universe, but there still looks like there are some nice tailwinds for ZWS and ETN, even beyond their own solid fundamental situation.
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Zurn Elkay Water Solutions Cor (ZWS) : Free Stock Analysis Report
Eaton Corporation, PLC (ETN) : Free Stock Analysis Report