Investors interested in stocks from the Waste Removal Services sector have probably already heard of Montrose Environmental (MEG) and Zurn Water (ZWS) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate rev ...

Core Insights - The investment approach focuses on identifying businesses with potential for long-term growth and significant terminal value generation [1] - Emphasis is placed on understanding core business economics, including competitive advantages, unit economics, reinvestment opportunities, and management quality [1] - The goal is to generate long-term free cash flow and create shareholder value through fundamental research in sectors with strong secular growth trends [1] Investment Philosophy - The investor is self-educated and has been active in the investment field for 10 years, currently managing personal funds sourced from friends and family [1] - The motivation for sharing insights on platforms like Seeking Alpha is to provide valuable analysis and receive feedback from other investors [1] - The focus is on helping readers understand the drivers of long-term equity value, with an emphasis on analytical and accessible analysis [1]

Core Insights - Zurn Elkay Water Solutions Corporation has been recognized as one of America's Most Responsible Companies for 2026 by Newsweek and Statista [1] - The company ranked No. 45 overall out of 600 companies, No. 6 in the Capital Goods sector, and No. 1 among 16 companies based in Wisconsin [1] Company Performance - Zurn Elkay's commitment to clean water is emphasized, highlighting its role as a leader in addressing complex water challenges [1]

Core Insights - Zurn Elkay Water Solutions Corporation has been recognized by TIME as one of the World's Best Companies for Sustainable Growth 2026 for the second consecutive year [1] - The ranking evaluates companies based on their financial performance and commitment to long-term environmentally responsible growth [1] Company Performance - Zurn Elkay ranked No. 229 overall in the TIME list [1] - The company secured the No. 40 position among U.S.-based companies [1] - Within its industry peers, Zurn Elkay was ranked No. 31 [1] - The company achieved the top position in Wisconsin [1]

Group 1: Seagate Technology Holdings plc (STX) - Seagate Technology Holdings plc is a data storage devices and solutions company with a Zacks Rank 1 [1] - The Zacks Consensus Estimate for its current year earnings has increased by 7% over the last 60 days [1] - The company has a PEG ratio of 1.10 compared to the industry average of 1.53, indicating strong growth potential [1] - Seagate possesses a Growth Score of B, reflecting its favorable growth characteristics [1] Group 2: Zurn Elkay Water Solutions Corporation (ZWS) - Zurn Elkay Water Solutions Corporation is a water management solutions provider with a Zacks Rank 1 [2] - The Zacks Consensus Estimate for its current year earnings has increased by 4.2% over the last 60 days [2] - The company has a PEG ratio of 2.26 compared to the industry average of 2.67, suggesting competitive growth prospects [2] - Zurn Elkay also possesses a Growth Score of B, indicating solid growth characteristics [2] Group 3: H World Group Limited (HTHT) - H World Group Limited is a hotel management company with a Zacks Rank 1 [3] - The Zacks Consensus Estimate for its current year earnings has increased by 3.1% over the last 60 days [3] - The company has a PEG ratio of 1.25 compared to the industry average of 1.95, highlighting its growth potential [3] - H World Group possesses a Growth Score of B, reflecting its strong growth characteristics [3]

Group 1 - The focus is on producing objective, data-driven research primarily about small- to mid-cap companies, which are often overlooked by many investors [1] - Occasionally, large-cap companies are analyzed to provide a broader perspective on the equity markets [1] Group 2 - There is a beneficial long position in the shares of ZWS, indicating a positive outlook on the company's stock [2]

Core Insights - Zurn Elkay Water Solutions Corporation has been recognized by TIME as one of America's Growth Leaders for 2026, highlighting its exceptional growth, financial stability, and stock performance [1] Company Overview - Founded in 1900, Zurn Elkay has built a legacy based on an innovative product portfolio that addresses water-related challenges effectively and efficiently [1]

Financial Data and Key Metrics Changes - The company reported a 11% organic sales growth year-over-year and a 16% increase in EBITDA to $122 million, with margins expanding by 120 basis points to 26.8% [4][10] - Free cash flow for the quarter was $94 million, and the company repurchased approximately 600,000 shares, totaling $135 million year-to-date, representing about 3.8% of total shares outstanding [4][11] - The company raised its dividend by 22% and refreshed its share buyback program to $500 million [4] Business Line Data and Key Metrics Changes - Sales totaled $455 million in the third quarter, reflecting 11% core growth year-over-year, with the non-residential market remaining positive while the residential market showed softness [9] - The company experienced a full quarter impact from tariff-related price increases implemented in April, contributing to the core growth [9][10] Market Data and Key Metrics Changes - The company anticipates that the market outlook for 2026 will resemble that of 2025, with an acceleration in growth pushed to 2027 due to uncertainties around tariffs and interest rates [5][6] - Key macro indicators such as the Dodge Momentum Index, Architectural Billing Index, and Construction Backlogs are monitored to assess future construction spending [16][19] Company Strategy and Development Direction - The company is focused on leveraging internal growth initiatives and competitive advantages, including product portfolio breadth and unique market positioning [6][30] - There is an intention to sharpen focus on driving organic growth into adjacent categories, supported by a strong cash flow generation and low leverage [29][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining price-cost positivity despite tariff impacts, projecting year-over-year core sales growth in the high single digits for the fourth quarter [32][33] - The company expects adjusted EBITDA margins to remain strong, with a new baseline established for future performance [64] Other Important Information - The company completed its U.S. pension plan termination, eliminating approximately $200 million in liabilities and related assets [11][12] - The company has maintained a strong track record of growth, with 55 out of the last 59 quarters showing year-over-year quarterly growth [26] Q&A Session Summary Question: Has there been any meaningful divergence in growth rates across legacy Zurn product categories over Q3 or into Q4? - Management indicated that most core categories are experiencing solid unit growth, with no significant changes expected as they head into the fourth quarter [38] Question: Can you provide an update on the reception of Elkay Pro Filtration and the market opportunity with the LIV EZ line? - Management reported strong uptake for the Elkay Pro Filtration system and expressed excitement about the LIV EZ product as a market extension, though not a primary growth pillar [40][41] Question: How should volume expectations be considered for the back half of the year? - Management noted good volume growth in Q3, with expectations for similar momentum in Q4, despite some pull forward in orders due to a price increase [46][47] Question: What are the priorities for capital allocation going forward? - Management reiterated a focus on reducing leverage, investing in core business, and maintaining a steady approach to share repurchases and dividends [52] Question: Can you provide insights on the M&A funnel and its evolution over the last 12 months? - Management stated that while the funnel has not changed significantly, there are more opportunities at the top, and they continue to evaluate various M&A prospects [58] Question: How do you view the consistent strong margin results and future expectations? - Management expressed confidence that the current margin levels represent a new baseline, with expectations for continued margin expansion driven by operational efficiencies [64]

Financial Data and Key Metrics Changes - The company reported a 11% organic sales growth year over year, with total sales reaching $455 million in Q3 [4][9] - Adjusted EBITDA grew 16% to $122 million, with EBITDA margins expanding 120 basis points to 26.8%, marking the highest quarterly margins since the Elkay merger [4][10] - Free cash flow for the quarter was $94 million, contributing to a year-to-date total of $135 million in share repurchases, representing about 3.8% of total shares outstanding [4][11] Business Line Data and Key Metrics Changes - The non-residential market remains positive, while the residential market continues to experience softness [9] - Incremental demand of approximately $8 million was shipped in Q3 due to customers ordering ahead of a pricing action [9][10] - The company has seen solid unit growth across almost all core categories, with no significant changes from previous quarters [38] Market Data and Key Metrics Changes - The Dodge Momentum Index, Architectural Billing Index, and Construction Backlogs are key indicators for future non-residential construction spending [16][19] - The company expects the market outlook for 2026 to resemble that of 2025, with low growth anticipated [5][26] - The company is over-indexed to stable segments within non-residential construction, particularly in education and healthcare [25] Company Strategy and Development Direction - The company aims to leverage internal growth initiatives and competitive advantages to drive organic growth [6][30] - There is a focus on expanding into adjacent markets with innovative products while maintaining a strong core business [30] - The company has refreshed its share buyback program to $500 million and raised its dividend by 22% [4][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to navigate the current tariff environment and maintain price-cost positivity [32][68] - The company raised its full-year estimates for growth, profitability, and cash flow, projecting core sales growth of approximately 8% for the full year [31] - Management noted that the tariff costs for 2025 are expected to be approximately $50 million, slightly higher than previous estimates [32] Other Important Information - The company completed its U.S. pension plan termination, eliminating approximately $200 million in liabilities [11][12] - Sustainability initiatives have advanced, with significant contributions to cleaner drinking water and reduced plastic waste [13][14] Q&A Session Summary Question: Divergence in growth rates across product categories - Management noted that almost all core categories are experiencing solid unit growth, with no significant changes expected as they head into Q4 [38] Question: Update on Elkay Pro Filtration and LIV EZ line - The Elkay Pro Filtration system has seen strong uptake, and the LIV EZ line is expected to tap into a small market with good growth potential [40][42] Question: Volume expectations for the back half of the year - Management indicated that good volume growth is expected, with some pull forward in Q3 offset by weakness in the residential market [47][48] Question: Capital allocation priorities - The company continues to generate significant free cash flow, focusing on reducing leverage, investing in core business, and evaluating stock value for share repurchases [53] Question: M&A funnel and market opportunities - The M&A funnel has seen modest growth, with a focus on returns on invested capital rather than specific valuations [59] Question: Aspirations for residential drinking water - Management characterized the appetite for residential filtration as low, viewing the LIV EZ product as an extension rather than a significant market entry [62] Question: Consistent strong margin results - Management highlighted consistent margin expansion since the Elkay merger, with a new baseline for margins established [66] Question: Navigating the tariff environment - The company has proactively moved manufacturing out of China, positioning itself well to manage tariff impacts [68]

Financial Data and Key Metrics Changes - Sales grew 11% organically year over year, totaling $455 million in Q3 2025 [4][8] - EBITDA increased 16% to $122 million, with margins expanding 120 basis points to 26.8% [4][10] - Free cash flow for the quarter was $94 million, with year-to-date repurchases reaching $135 million [4][11] - The company raised its dividend by 22% and refreshed its share buyback program to $500 million [4][11] Business Line Data and Key Metrics Changes - The non-residential market remains positive, while the residential market continues to experience softness [9] - Core growth reflects higher realization of tariff-related price increases implemented in April [9] - Incremental demand of about $8 million was shipped due to customers ordering ahead of a pricing action in mid-September [9][10] Market Data and Key Metrics Changes - The Dodge Momentum Index, Architectural Billing Index, and Construction Backlogs are tracked as key indicators for future non-residential construction spending [15][19] - The market outlook for 2026 is expected to resemble that of 2025, with low growth anticipated [5][26] - The company is over-indexed to stable segments within non-residential construction, particularly education and healthcare [24][25] Company Strategy and Development Direction - The company is focused on leveraging internal growth initiatives and competitive advantages in product portfolio and market positioning [6][30] - Plans to sharpen focus on driving organic growth into adjacent categories while maintaining a premier pure play water business in North America [30] - The company aims to exploit competitive advantages in specification, supply chains, and go-to-market capabilities [30] Management's Comments on Operating Environment and Future Outlook - Management raised full-year estimates for growth, profitability, and cash flow, projecting core sales growth of approximately 8% for the full year [31] - Tariff costs for 2025 are now expected to be approximately $50 million, slightly higher than previous estimates [33] - The company remains confident in its ability to navigate the tariff environment and maintain price-cost positivity [33][74] Other Important Information - The company completed its U.S. pension plan termination, eliminating approximately $200 million in liabilities [11][12] - Sustainability initiatives have advanced, including delivering 1.8 billion gallons of filtered drinking water and eliminating the need for 14.6 billion single-use plastic bottles [13][14] Q&A Session Summary Question: Any meaningful divergence in growth rates across legacy Zurn Elkay product categories? - Management noted that almost all core categories are experiencing solid unit growth, with no significant changes expected as they head into Q4 [38] Question: Update on the reception of Elkay Pro Filtration and market opportunity with LIV EZ line? - The Elkay Pro Filtration system has seen strong uptake, and the LIV EZ line is expected to grow nicely, though it is not anticipated to be a major pillar of the commercial drinking water offering [40][42] Question: Clarification on volume expectations and capital allocation priorities? - Management indicated that Q4 growth is expected to be equal to Q3 momentum, with a focus on maintaining a steady repurchase strategy while generating significant free cash flow [50][56] Question: Insights on the M&A funnel and aspirations for residential drinking water? - The M&A funnel has seen modest growth, with no significant changes in valuations. The company does not have a high appetite for entering residential filtration but sees the LIV EZ as an extension of existing offerings [60][62] Question: Consistent strong margin results and future expectations? - Management expressed confidence that the current margin levels represent a new baseline, with expectations of 30% to 35% incrementals on volume in the long term [71]