Why has ZWS beaten EPS estimates every quarter?

Zurn Elkay Water Solutions Corp (ZWS) has consistently beaten EPS estimates every quarter, as evidenced by the latest report period ending on December 31, 2024. This consistent performance can be attributed to several key factors:

|code|Ticker|Name|Date|EPS Surprise|Diluted EPS|market_code|
|---|---|---|---|---|---|---|
|ZWS|ZWS.N|Zurn Elkay Water|2024 Q1|0.03|0.19|169|
|ZWS|ZWS.N|Zurn Elkay Water|2024 Q2|0.02|0.27|169|
|ZWS|ZWS.N|Zurn Elkay Water|2024 Q3|0.02|0.25|169|
|ZWS|ZWS.N|Zurn Elkay Water|2024 Q4|0.04||169|

1. **Strategic Focus on Core Sales Growth**: Zurn Elkay has prioritized growth in its core sales, which have seen a 3% increase year-over-year. This focus on core sales has been a significant driver of the company's financial performance, contributing to the beat on EPS estimates.
2. **Efficient Cost Management**: The company has demonstrated improved efficiency and cost management, as reflected in the increased gross profit margin to 45.51%. This ability to manage costs effectively allows Zurn Elkay to maintain profitability and exceed market expectations.
3. **Product Portfolio and Technological Innovation**: Zurn Elkay's extensive portfolio of water management products, including water control and safety systems, water distribution and drainage solutions, and finish plumbing and hygienic solutions, positions the company well to capitalize on the growing demand for sustainable water solutions. The company's commitment to innovation and sustainability has been recognized with awards such as the 2025 Top Workplaces USA honor.
4. **Market Position and Competitive Advantage**: As a leading provider of clean water solutions, Zurn Elkay holds a strong market position, particularly in the institutional and commercial construction markets. The company's extensive sales and distribution network, spanning over 30 countries, ensures high product availability and quick response to market demands.
5. **Financial Performance and Cash Flow Generation**: Zurn Elkay has demonstrated robust financial performance, with record sales, EBITDA, and cash flow performance. The company's ability to generate strong cash flows has allowed it to deploy capital effectively, including share repurchases and dividend payments, which aligns with the interests of both employees and shareholders.

In conclusion, Zurn Elkay's ability to beat EPS estimates can be attributed to its strategic focus on core sales growth, efficient cost management, innovative product portfolio, strong market position, and robust financial performance. These factors combined have enabled the company to consistently exceed market expectations and deliver strong financial results.