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Zurn Elkay Water Solutions Corporation (NYSE:ZWS), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$40.92 at one point, and dropping to the lows of US$32.38. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Zurn Elkay Water Solutions' current trading price of US$33.48 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Zurn Elkay Water Solutions’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for Zurn Elkay Water Solutions
What's The Opportunity In Zurn Elkay Water Solutions?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 17% below our intrinsic value, which means if you buy Zurn Elkay Water Solutions today, you’d be paying a fair price for it. And if you believe the company’s true value is $40.24, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, Zurn Elkay Water Solutions’s low beta implies that the stock is less volatile than the wider market.
What kind of growth will Zurn Elkay Water Solutions generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Zurn Elkay Water Solutions' earnings over the next few years are expected to increase by 53%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? ZWS’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on ZWS, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.