Can ZWS maintain its earnings momentum in 2025?

**Zurn Elkay Water Solutions Corp (ZWS) is poised to maintain its earnings momentum in 2025**, based on several key indicators and strategic initiatives:

1. **Strong Financial Performance**: ZWS reported a 4% core growth in the fourth quarter of 2024, leading to an 8% increase in adjusted EBITDA and a 100 basis point improvement in margins. The company achieved a 15% growth in EBITDA for the year, reaching $390 million, with margins improving by 270 basis points to 24.9%. This robust financial performance sets a positive tone for the company's future growth.

|code|Ticker|Name|Date|Total Revenue|Net Income|market_code|
|---|---|---|---|---|---|---|
|ZWS|ZWS.N|Zurn Elkay Water|2024 Q1|3.738E8|3.43E7|169|
|ZWS|ZWS.N|Zurn Elkay Water|2024 Q2|4.12E8|4.6E7|169|
|ZWS|ZWS.N|Zurn Elkay Water|2024 Q3|4.1E8|4.35E7|169|
|ZWS|ZWS.N|Zurn Elkay Water|2024 Q4|3.707E8|3.64E7|169|

|code|Ticker|Name|Date|Diluted EPS YoY|Diluted EPS|market_code|
|---|---|---|---|---|---|---|
|ZWS|ZWS.N|Zurn Elkay Water|2024 Q1|46.15384615384615|0.19|169|
|ZWS|ZWS.N|Zurn Elkay Water|2024 Q2|35|0.27|169|
|ZWS|ZWS.N|Zurn Elkay Water|2024 Q3|4.1666666666666705|0.25|169|

|code|Ticker|Name|Date|Net Income YoY|Total Revenue YoY|Diluted EPS YoY|market_code|
|---|---|---|---|---|---|---|---|
|ZWS|ZWS.N|Zurn Elkay Water|2024 Q1|50.43859649122807|0.4568664337543671|46.15384615384615|169|
|ZWS|ZWS.N|Zurn Elkay Water|2024 Q2|32.947976878612714|2.1825396825396823|35|169|
|ZWS|ZWS.N|Zurn Elkay Water|2024 Q3|5.072463768115942|2.9116465863453818|4.1666666666666705|169|
|ZWS|ZWS.N|Zurn Elkay Water|2024 Q4|161.8705035971223|3.8957399103139014||169|

2. **Strategic Growth Initiatives**: ZWS has a track record of positive core growth in 52 out of the last 56 quarters, indicating a strong sales history. The company's focus on expanding the installed base of filtered bottle fillers and increasing the attachment rate suggests a strategic approach to driving growth. Additionally, ZWS's EBITDA outlook for 2025 is expected to be between $405 million and $420 million, which represents a continuation of the company's upward trend.
3. **Cash Flow and Capital Allocation**: ZWS generated $272 million in free cash flow for the year 2024, with $55 million in the fourth quarter alone. The company successfully repurchased $150 million worth of shares throughout the year, demonstrating strong capital allocation. This financial flexibility will be crucial for the company to continue its growth trajectory.
4. **Analyst Confidence**: The average analyst price target for ZWS is $36.5, with a consensus rating of "Neutral" as of January 10, 2025. This suggests that analysts are not only recognizing the company's strong earnings momentum but are also optimistic about its future prospects.

5. **Market Position and Challenges**: While ZWS faces potential uncertainties in 2025, including emerging tariff dynamics and the impact of interest rates on growth, the company's strong financial performance and strategic flexibility suggest that it is well-positioned to navigate these challenges.

In conclusion, Zurn Elkay Water Solutions Corp (ZWS) is likely to maintain its earnings momentum in 2025, driven by strong financial performance, strategic growth initiatives, and positive market sentiment. However, the company will need to continue to address potential challenges and capitalize on its strategic positioning to sustain this momentum.