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Zurn Water Solutions Corporation (RXN)

Company Dividend Discount ModelIndustry: Regulated WaterSector: Utilities

Valuation Snapshot

Stable Growth$11.40 - $16.40$13.84
Multi-Stage$18.34 - $20.15$19.23
Blended Fair Value$16.54
Current Price$64.95
Upside-74.54%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202020192018201720162015201420132012
DPS0.00%0.00%0.330.160.140.140.030.000.000.000.000.00
YoY Growth--108.09%17.24%0.00%427.27%0.00%0.00%0.00%0.00%0.00%0.00%
Dividend Yield--0.51%0.70%0.45%0.46%0.11%0.00%0.00%0.00%0.00%0.00%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)277.20
(-) Cash Dividends Paid (M)66.80
(=) Cash Retained (M)210.40
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)55.4434.6520.79
Cash Retained (M)210.40210.40210.40
(-) Cash Required (M)-55.44-34.65-20.79
(=) Excess Retained (M)154.96175.75189.61
(/) Shares Outstanding (M)171.80171.80171.80
(=) Excess Retained per Share0.901.021.10
LTM Dividend per Share0.390.390.39
(+) Excess Retained per Share0.901.021.10
(=) Adjusted Dividend1.291.411.49
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate-2.00%-1.00%0.00%
Fair Value$11.40$13.84$16.40
Upside / Downside-82.45%-78.69%-74.74%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)277.20274.43271.68268.97266.28263.61271.52
Payout Ratio24.10%37.28%50.46%63.64%76.82%90.00%92.50%
Projected Dividends (M)66.80102.30137.09171.17204.55237.25251.16

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate-2.00%-1.00%0.00%
Year 1 PV (M)92.8293.7794.72
Year 2 PV (M)112.86115.18117.52
Year 3 PV (M)127.86131.82135.85
Year 4 PV (M)138.64144.39150.31
Year 5 PV (M)145.91153.51161.42
PV of Terminal Value (M)2,532.982,664.872,802.21
Equity Value (M)3,151.083,303.543,462.03
Shares Outstanding (M)171.80171.80171.80
Fair Value$18.34$19.23$20.15
Upside / Downside-71.76%-70.39%-68.97%

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