Is Zurn Elkay Water Solutions Corp. overvalued or undervalued?

As of 22 April 2025, the valuation grade for Zurn Elkay Water Solutions Corp. has moved from expensive to very expensive, indicating a significant increase in perceived overvaluation. The company is currently assessed as overvalued. Key ratios include a P/E ratio of 36, an EV to EBITDA of 24.61, and a Price to Book Value of 3.97, all of which are considerably higher than industry averages.
In comparison to peers, Zurn Elkay's P/E ratio of 36 is notably lower than Woodward, Inc. at 42.64 but higher than ITT, Inc. at 22.89, which suggests that while it is less expensive than the highest peer, it remains significantly above the lower end of the spectrum. The PEG ratio stands at 1.05, indicating that growth expectations may not justify the current price level. Recent stock performance shows that Zurn Elkay has outperformed the S&P 500 over the past year with an 18.40% return compared to the index's 10.26%, yet this does not mitigate the valuation concerns.