Zurn Elkay Water Solutions, a provider of water management solutions, has demonstrated elite gross margins and excellent free cash flow generation, but its organic revenue growth has been underwhelming. The company averaged a 42.6% gross margin over the last five years, signaling pricing power and differentiated products. Its free cash flow margin averaged 15.1% over the same period, placing it among the best in the industrials sector. However, organic revenue growth averaged just 5.8% year-on-year over the last two years, suggesting waning demand in its core business. The stock currently trades at $50.19 per share, or 27 times forward earnings.
Zurn Elkay Water Solutions CorporationArticle reports strong margins and cash flow but slow organic growth; mixed financial signals.