Abstract
Zurn Water Solutions will report fiscal Q2 2026 results on July 28, 2026 Post-Mkt, with investors watching revenue, margins, and adjusted EPS for signs of sustained growth momentum and pricing discipline across key end-markets.
Market Forecast
Consensus points to current-quarter revenue of 483.09 million US dollars, up 13.66% year over year, EBIT of 109.98 million US dollars with 28.18% YoY growth, and adjusted EPS of 0.47, up 31.75% YoY. Forecasts imply continued margin expansion: management is expected to sustain gross margin near the high-40% range, while improving profitability should support mid-teens net margin and stronger EPS leverage versus revenue growth. The company’s main business remains weighted toward institutional and commercial applications, where institutional revenue is estimated at 214.20 million US dollars and commercial at 126.60 million US dollars, with the balance from other categories at 92.20 million US dollars; management focus remains on specification-led demand, mix, and disciplined pricing. The most promising area continues to be high-spec institutional demand and retrofit-driven commercial activity, supported by project backlogs and channel inventory normalization.
Last Quarter Review
In the previous quarter, Zurn Water Solutions delivered revenue of 433.00 million US dollars, gross margin of 47.53%, GAAP net income attributable to shareholders of 58.90 million US dollars, a net margin of 13.60%, and adjusted EPS of 0.41, with revenue rising 11.37% year over year and adjusted EPS up 32.26% year over year. The company outperformed its own guide and market expectations, with EBIT of 95.00 million US dollars exceeding estimates, indicating positive operating leverage and cost control. Institutional solutions contributed 214.20 million US dollars, commercial contributed 126.60 million US dollars, and other categories contributed 92.20 million US dollars, with solid momentum in institutional end-markets and steady commercial demand.
Current Quarter Outlook
Main business trajectory and revenue quality
The core business mix skews toward institutional and commercial plumbing and water management solutions, where project pipelines and engineering specifications are key drivers. Near-term revenue growth is expected to be supported by specification wins, channel restocking in select categories, and price carryover from prior actions. Given the prior quarter’s gross margin of 47.53%, the market expects further incremental expansion from mix and efficiency, which, if realized, should translate into EPS growth outpacing revenue growth. The main swing factors remain nonresidential construction momentum and order cadence in institutional projects, which appear resilient into July 2026.
Most promising segment and incremental growth drivers
Institutional demand is positioned as the most promising revenue engine given the larger base and visibility from long-duration projects. The company’s presence across specification-heavy fixtures, drain and backflow systems, and connected water management supports higher-margin mix and recurring retrofit opportunities. For the quarter, the institutional category is modeled at 214.20 million US dollars within last-quarter mix and expected to grow as public funding and renovation cycles filter into equipment orders. Successful conversion of specification pipelines, stable lead times, and service attach rates should lift EBIT growth above revenue growth by roughly 280 to 320 basis points relative to YoY revenue growth assumptions.
Key stock-price catalysts and risks this quarter
The stock’s near-term reaction is likely to be driven by gross margin and EPS conversion versus consensus, with attention on whether gross margin can hold near the high-40% bracket while inventory and logistics costs remain controlled. Commentary on project funnel health, order rates in commercial retrofit, and any updates on price-cost balance will set the tone for the back half of 2026. A secondary catalyst is the cadence of specification share gains and cross-selling of higher-value solutions that bolster blended margins. Risks include slower institutional approval cycles, delays in project starts, or softer channel restocking, which could temper the high-teens EPS growth outlook even if revenue meets expectations.
Analyst Opinions
Most recent institutional commentary trends positive, with bullish views outweighing cautious ones based on expectations for mid-teens revenue growth and solid incremental margins in fiscal Q2 2026; the tilt favors upside if pricing discipline and mix hold. Analysts emphasize that the setup features double-digit revenue growth alongside mid- to high-teens EBIT expansion, and that adjusted EPS should benefit from operating leverage and share count stability. The constructive view highlights resilient institutional pipelines and ongoing retrofit demand, with several research desks pointing to upside potential if gross margin sustains near the high-40% range and EBIT surpasses the 110 million US dollar mark. Overall, the prevailing stance anticipates a beat-and-raise scenario if order momentum and price realization persist through late July 2026.Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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