Financial Contrast: Zurn Elkay Water Solutions Cor (NYSE:ZWS) & Quanex Building Products (NYSE:NX)

Zurn Elkay Water Solutions Cor (NYSE:ZWS) and Quanex Building Products (NYSE:NX) are both industrials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitability, risk, institutional ownership, valuation, dividends, earnings and analyst recommendations.

Dividends

Zurn Elkay Water Solutions Cor pays an annual dividend of $0.44 per share and has a dividend yield of 0.9%. Quanex Building Products pays an annual dividend of $0.32 per share and has a dividend yield of 1.6%. Zurn Elkay Water Solutions Cor pays out 27.2% of its earnings in the form of a dividend. Quanex Building Products pays out -5.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Zurn Elkay Water Solutions Cor has increased its dividend for 3 consecutive years. Quanex Building Products is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

83.3% of Zurn Elkay Water Solutions Cor shares are held by institutional investors. Comparatively, 97.5% of Quanex Building Products shares are held by institutional investors. 2.4% of Zurn Elkay Water Solutions Cor shares are held by insiders. Comparatively, 1.9% of Quanex Building Products shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Zurn Elkay Water Solutions Cor and Quanex Building Products”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Zurn Elkay Water Solutions Cor	$1.70 billion	4.80	$198.00 million	$1.62	30.31
Quanex Building Products	$1.84 billion	0.51	-$250.81 million	($5.63)	-3.61

Zurn Elkay Water Solutions Cor has higher earnings, but lower revenue than Quanex Building Products. Quanex Building Products is trading at a lower price-to-earnings ratio than Zurn Elkay Water Solutions Cor, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Zurn Elkay Water Solutions Cor and Quanex Building Products, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Zurn Elkay Water Solutions Cor	0	3	5	1	2.78
Quanex Building Products	1	1	1	0	2.00

Zurn Elkay Water Solutions Cor presently has a consensus price target of $57.22, indicating a potential upside of 16.54%. Quanex Building Products has a consensus price target of $28.00, indicating a potential upside of 37.73%. Given Quanex Building Products’ higher probable upside, analysts plainly believe Quanex Building Products is more favorable than Zurn Elkay Water Solutions Cor.

Profitability

This table compares Zurn Elkay Water Solutions Cor and Quanex Building Products’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Zurn Elkay Water Solutions Cor	15.45%	18.01%	10.74%
Quanex Building Products	-13.85%	11.11%	4.07%

Volatility & Risk

Zurn Elkay Water Solutions Cor has a beta of 1.04, meaning that its stock price is 4% more volatile than the S&P 500. Comparatively, Quanex Building Products has a beta of 0.92, meaning that its stock price is 8% less volatile than the S&P 500.

Summary

Zurn Elkay Water Solutions Cor beats Quanex Building Products on 13 of the 18 factors compared between the two stocks.

About Zurn Elkay Water Solutions Cor

Zurn Elkay Water Solutions Corporation engages in design, procurement, manufacture, and marketing of water management solutions in the United States, Canada, and internationally. It offers water safety and control products, such as backflow preventers, fire system valves, pressure reducing valves, thermostatic mixing valves, PEX pipings, fittings, and installation tools under the Zurn and Wilkins brand names. The company also provides flow systems products comprising point drains, hydrants, fixture carrier systems, chemical drainage systems; and interceptors and separators, acid neutralization systems, and remote monitoring systems under the Zurn and Green Turtle brands. In addition, it develops, manufactures, and markets remote tank monitoring devices, alarms, software, and services. Further, the company offers sensor-operated flush valves under the AquaSense, Aquaflush, and AquaVantage brands; heavy-duty commercial faucets under the AquaSpec brand; water conserving fixtures under the EcoVantage and Zurn One brands; stainless steel products under the Just Manufacturing brand name, which include stainless steel sinks and plumbing fixtures, and various types of sinks, as well as drinking water dispensing and filtration products under the Elkay and Halsey Taylor brands. It distributes to institutional, commercial, waterworks, and residential end markets through independent sales representatives, plumbing wholesalers, and industry-specific distributors in the waterworks, foodservice, industrial, janitorial, sanitation, and sitework industries. The company was formerly known as Zurn Water Solutions Corporation and changed its name to Zurn Elkay Water Solutions Corporation in July 2022. Zurn Elkay Water Solutions Corporation was incorporated in 1892 and is headquartered in Milwaukee, Wisconsin.

About Quanex Building Products

Quanex Building Products Corporation, together with its subsidiaries, provides components for the fenestration industry in the United States, rest of Europe, Canada, Asia, the United Kingdom, and internationally. The company operates through three segments: North American Fenestration, European Fenestration, and North American Cabinet Components. It offers flexible insulating glass spacers, extruded vinyl profiles, window and door screens, and precision-formed metal and wood products, as well as cabinet doors and other components for original equipment manufacturers (OEMs) in the kitchen and bathroom cabinet industry. In addition, the company provides various non-fenestration components and products, including solar panel sealants, trim moldings, vinyl decking, fencing, water retention barriers, and conservatory roof components. It sells its products to OEMs in the building products industry through sales representatives, direct sales force, distributors, and independent sales agents. Quanex Building Products Corporation was founded in 1927 and is based in Houston, Texas.