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While Zurn Elkay Water Solutions Corporation (NYSE:ZWS) might not have the largest market cap around , it received a lot of attention from a substantial price increase on the NYSE over the last few months. The company's trading levels have reached its high for the past year, following the recent bounce in the share price. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Today we will analyse the most recent data on Zurn Elkay Water Solutions’s outlook and valuation to see if the opportunity still exists.
See our latest analysis for Zurn Elkay Water Solutions
Is Zurn Elkay Water Solutions Still Cheap?
According to our valuation model, Zurn Elkay Water Solutions seems to be fairly priced at around 16% below our intrinsic value, which means if you buy Zurn Elkay Water Solutions today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $43.27, then there’s not much of an upside to gain from mispricing. What's more, Zurn Elkay Water Solutions’s share price may be more stable over time (relative to the market), as indicated by its low beta.
What does the future of Zurn Elkay Water Solutions look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. With profit expected to grow by 80% over the next couple of years, the future seems bright for Zurn Elkay Water Solutions. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? It seems like the market has already priced in ZWS’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on ZWS, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook 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.