Zurn Elkay Water Solutions (ZWS), mcap=$5bn, price $28.89 vs $27.01

– Producer of plumbing products for commercial and institutional applications.
– RemainCo from $RRX spin-off.
– The recent acquisition increased revenue by 70% with material synergies.
– Well-positioned in an attractive industry, set to gain market share organically and through M&A.
– The commercial construction industry is still below pre-pandemic levels.

– The base case scenario is 7% organic topline growth.
– 30% incremental margins and 14x EBITDA results in 22% IRR over the next 5 years.
– Under more optimistic assumptions IRR rises to 30%+.

Exp. gain: 22% IRR till 2027.

Full $ZWS write-up (free guest account required):

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