Zurn Elkay Plans 14% Dividend Hike Amid Projected Earnings Rise
Dividend Increase despite Below-Average Yield
Zurn Elkay Water Solutions Corporation (ZWS) has announced an impressive 14% increase in its periodic dividend. The dividend will be raised to $0.08 on December 7th, defying its below-average yield of 1.1%. ZWS’s decision is backed by its significant cash flow, which comfortably covered its last dividend payout, even during periods of unsatisfactory profits.
Strong Financial Performance
According to InvestingPro, ZWS boasts a market capitalization of $4.43 billion USD and a price-to-earnings (P/E) ratio of 86.17. The company’s revenue growth has been accelerating, with a reported increase of 55.54% in the last twelve months (LTM2023.Q2) and a quarterly growth rate of 41.87% in FY2023.Q2. ZWS’s gross profit for the same period stood at $572.1 million USD, resulting in an impressive margin of 37.31%. These metrics indicate a robust financial performance.
Promising Earnings Outlook
Analysts predict a substantial increase in ZWS’s earnings per share (EPS) for the upcoming year. If this trend continues, the company’s payout ratio could stabilize at 32%. This suggests that the current elevated dividend levels could be sustainable. InvestingPro Tips highlight that despite a declining trend in EPS, net income is expected to grow this year. Additionally, the company’s liquid assets exceed its short-term obligations, ensuring its financial health. These insights are part of the valuable tips offered by InvestingPro to its users.
Potential Challenges and Optimistic Outlook
Despite experiencing some volatility in its dividends, with an annual decrease of 3.3% over the past four years, ZWS faces potential challenges due to its declining EPS. Over the past five years, the company’s EPS has been falling at an average rate of 32% per year. This downward trend could pose a threat to the company’s future dividend growth. However, there is optimism as ZWS’s earnings are projected to rise in the next year. This positive outlook may counterbalance the recent EPS decline and provide a more stable foundation for the company’s dividend policy. InvestingPro data also reveals that analysts predict the company will be profitable this year, with a strong return over the last five years.
This article provides valuable insights into Zurn Elkay Water Solutions Corporation’s dividend increase and its financial performance. The company’s decision to raise the dividend despite a below-average yield showcases its confidence in its cash flow. ZWS’s robust financial performance, accelerating revenue growth, and strong profit margins contribute to its positive outlook. However, the company faces challenges with declining dividends and EPS. Nevertheless, analysts predict an earnings rise in the upcoming year, offering hope for the stability of ZWS’s dividend policy. For more information, please visit InvestingPro.