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Zurn Water (ZWS) Buys Wade Drains, Boosts Flow Systems Prospects

Zurn Water Solutions Corporation ZWS recently announced that it has acquired McWane, Inc.’s Wade Drains product portfolio. The financial terms of the transaction have been kept under wraps.

This is the first acquisition made by Zurn Water since it started trading on the NYSE from Oct 5, 2021. Zurn Water is Rexnord Corporation’s new legal name after it completed the spin-off of the Process & Motion Control segment to Regal Beloit Corporation on Oct 4. (For information about the spin-off and other related events, please read: Rexnord Trades as Zurn Water Post Regal Beloit Deal)

In the past two trading days, Zurn Water’s shares lost 0.1%, ending the trading session at $37.74 yesterday.

Inside the Headlines

Wade Drains specializes in manufacturing plumbing products for commercial uses. It boasts a solid customer base in North America and a wide variety of products. The products offered include siphonic drainage, hydrants, cleanouts and access covers, funnels, interceptors, roof drains, and others.

The business was founded in 1865.

With the addition of Wade Drains, Zurn Water is well-positioned to leverage the benefits of its extended product offerings, customer base, engineering expertise, and experienced team. The buyout will enhance Zurn Water’s flow systems portfolio, manufacturing capabilities, and revenue base.

In the first three quarters of 2021, Zurn Water invested $3.4 million for making acquisitions (net of acquired cash). Benefits from acquisitions/divestitures boosted sales by 3% in the third quarter of 2021.

Notably, previously acquired Hadrian boosted sales of Water Management segment by 9% year over year in the third quarter.

Zacks Rank, Price Performance and Earnings Estimate Trend

With a market capitalization of $4.6 billion, Zurn Water currently carries a Zacks Rank #5 (Strong Sell). Rising costs and expenses and any transportation delays might be concerning for Zurn Water in the quarters ahead. Solid product offerings, healthy demand, and acquired assets might aid.

In the past month, Zurn Water’s shares have gained 5.7% compared with the industry’s growth of 5.1%.

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for Zurn Water’s earnings is pegged at 80 cents per share for 2021 and $1.09 for 2022, reflecting a decrease of 44.8% and growth of 3.8% from the respective 30-day-ago figures. Earnings estimates for the fourth quarter of 2021 are down 68.8% to 10 cents per share.

Zurn Water Solutions Corporation Price and Consensus

Zurn Water Solutions Corporation price-consensus-chart | Zurn Water Solutions Corporation Quote

Stocks to Consider

Three better-ranked stocks in the Zacks Industrial Products sector, which are actively engaged in buyout activities, are discussed below.

Helios Technologies, Inc. HLIO acquired China-based Shenzhen Joyonway Electronics & Technology Co., Ltd.’s electronic control systems and parts business in October 2021. Italy-based NEM S.r.l was purchased by Helios in July 2021 while it bought BJN Technologies, LLC in January 2021. HLIO presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Helios’ shares have gained 28.4% in the past three months. The Zacks Consensus Estimate for earnings increased 7.9% for 2021 and 9.8% for 2022 in the past 30 days.

A. O. Smith Corporation AOS enhanced its commercial and water heater offerings by acquiring Canada-based Giant Factories, Inc. in October 2021. It purchased Master Water Conditioning Corporation in July. AOS presently carries a Zacks Rank #2.

In the past three months, AOS’ shares have gained 23.5%. Also, the Zacks Consensus Estimate for A. O. Smith’s earnings has increased 6.6% for 2021 and 9% for 2022 in the past 30 days.

Applied Industrial Technologies, Inc. AIT acquired Gibson in January 2021 and R.R. Floody in August 2021. The R.R. Floody buyout has been strengthening its offerings in the automation technology space and boosting its reach across the U.S. Midwest market. AIT presently carries a Zacks Rank #2.

Shares of Applied Industrial have gained 7.3% in the past three months. The Zacks Consensus Estimate for AIT’s earnings has increased 1.9% for fiscal 2022 (ending June 2022) and 2.2% for fiscal 2023 (ending June 2023) in the past month.


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