ZWS
Zurn Elkay Water Solutions Corporation
$47.73
Platform & Compounding FCF
85%
Two-stage FCF DCF
Moderate
·
Conviction
Overvalued
Trading 16.2% above fair value
You pay
$47.73
Bear
$29.23
Fair
$41.09
Bull
$53.00
Bear
$29.23
-38.8%
7% stage 1 growth, 11% discount
Fair
$41.09
-13.9%
11% stage 1 growth, 11% discount
Bull
$53.00
+11.0%
14% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (11% base case)
Terminal Value % of EV
40%
Implied Market Multiple
28.9x
Market is pricing in (growth)
13.9%
vs 10.9% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $54.86 from 8 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $41.09 per share.
Warnings
Wall Street's average price target is $54.86 (from 8 analysts). Our estimate is 31% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions