Zurn Elkay Water Solutions falls after quarterly results surprise and management call

What happened

Zurn Elkay Water Solutions (ZWS) fell 11.5% on October 28, 2026, because of its third-quarter results and an earnings call that day. The stock opened 6.1% below the previous close and closed at $43.50, with trading volume 2.7 times its 20-day average. The S&P 500 rose 0.3% while the Industrials sector median rose 0.2%, leaving the stock 11.7 percentage points worse than its sector median. The company had a market value of $8.05 billion on the session.

How big was the move

The session represented a large company-specific reaction, measuring 6.1 times a typical daily move for this stock. Trading volume of 2.7 times its 20-day average signaled heavy participation. Over the last five sessions the stock fell 10.1%, compared with the S&P 500, which fell 0.2% over the same period. The stock’s market sensitivity is a beta of 0.68, meaning the stock tends to move less than the market.

The technical picture

The stock traded below several moving averages: it was 8.2% below its 20-day moving average, 8.0% below its 50-day moving average and 10.0% below its 200-day moving average. The 50-day average is below the 200-day average, a sign of a weak longer-term trend. The Relative Strength Index (14 days) stood at 30, in the neutral range between 30 and 70. The share price was 20.9% below the 52-week high and the stock fell 7.0% over one month and 13.2% over three months.

Fundamentals and valuation

For the four quarters through September 30, 2026, revenue was $1.78 billion, which grew 7.1% from a year earlier. Diluted earnings per share for that period were $1.71, up 52.7% from a year earlier, while gross margin improved to 47.1% from 43.1% a year earlier. Operating margin was 18.7% compared with 16.5% a year earlier, and the free-cash-flow margin was 21.6%. Return on invested capital was 9.3% and the balance sheet showed net debt of 0.6 times EBITDA. Share count over one year decreased by 1.3%.

Valuation measures show a price to trailing earnings of 25.4 times trailing earnings and a price to forward earnings of 23.7 times expected earnings. The free-cash-flow yield was 4.8%. The price to trailing earnings is lower than 86% of its own readings over the past five years, with a five-year median of 41.1 times earnings. That combination — solid recent earnings growth and a valuation below much of its recent history — helps explain mixed investor reactions.

Earnings and analyst expectations

Zurn Elkay Water Solutions reported on October 27, 2026, third-quarter results with diluted earnings of $0.52 per share, against a Zacks Consensus Estimate of $0.50, 4.2% above estimates. That result rose from $0.43 a year earlier and extended a streak of 15 consecutive quarters beating estimates. The company held an earnings call on October 28, 2026, with senior management including the CEO, CFO, President and COO to discuss the quarter. The average surprise over the last four reports was 6.6% above estimates, and the typical two-day reaction after recent reports was that the stock rose 0.7%.

Analysts’ consensus price target is $59.20, which is 36.1% above the closing price on October 28, 2026, based on nine analysts with ratings. Forty-four percent of those analysts rate the stock Buy or Strong Buy, and the consensus rating is Hold. The next scheduled report is February 2, 2027.

What to watch

• February 2, 2027: next scheduled earnings report.
• Consensus price target $59.20, 36.1% above the October 28, 2026, close.
• Net debt of 0.6 times EBITDA and free-cash-flow margin of 21.6% for the four quarters through September 30, 2026.
• Consecutive quarters beating estimates: 15 and average surprise over the last four reports of 6.6% above estimates
• Share count decreased by 1.3% over one year