While Zurn Elkay Water Solutions Corporation (NYSE:ZWS) might not have the largest market cap around , it maintained its current share price over the past couple of month on the NYSE, with a relatively tight range of US$30.46 to US$33.47. However, does this price actually reflect the true value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let's take a look at Zurn Elkay Water Solutions's outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What's The Opportunity In Zurn Elkay Water Solutions?
According to our valuation model, Zurn Elkay Water Solutions seems to be fairly priced at around 10% below our intrinsic value, which means if you buy Zurn Elkay Water Solutions today, you'd be paying a reasonable price for it. And if you believe the company's true value is $34.06, then there's not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Zurn Elkay Water Solutions's beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will Zurn Elkay Water Solutions generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it's the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Zurn Elkay Water Solutions' earnings over the next few years are expected to increase by 92%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? It seems like the market has already priced in ZWS's positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven't considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you've been keeping tabs on ZWS, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it's worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Since timing is quite important when it comes to individual stock picking, it's worth taking a look at what those latest analysts forecasts are. At Simply Wall St, we have the analysts estimates which you can view by clicking here.
If you are no longer interested in Zurn Elkay Water Solutions, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.