Zurn Elkay Water Solutions Corporation (ZWS) Stock Analysis

Zurn Elkay Water Solutions’ primary competitive advantage lies in its focused, specification-driven product portfolio for water management in institutional and commercial buildings. The company’s brands—Zurn, Elkay, and Wilkins—are widely recognized for quality and compliance, which is critical in markets where products must meet stringent regulatory and building code requirements. This creates high switching costs and fosters long-term customer relationships, particularly in education, healthcare, and government segments.

ZWS benefits from a strong installed base, especially in drinking water solutions, with approximately 6 million drinking fountains in the U.S. This supports recurring, high-margin revenue from filter replacements and upgrades. The company’s 86% revenue contribution from products with sustainable attributes further differentiates it as regulatory and customer focus on sustainability intensifies.

Operationally, the Zurn Elkay Business System (ZEBS) drives continuous improvement, supporting margin expansion (operating margin rose from 12.5% in 2023 to 17.0% in 2025) and robust free cash flow conversion. Customer concentration is a risk—one distributor accounts for 19% of sales—but ZWS’s broad product range and service reputation mitigate this.

Compared to peers like Watts Water Technologies and A. O. Smith, ZWS’s pure-play focus, brand strength, and sustainability leadership are distinctive. However, larger rivals may have broader geographic reach or product diversification. ZWS’s culture of innovation and disciplined capital allocation underpin its ability to sustain above-industry growth and profitability.