The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Mueller Water Products (NYSE:MWA) and the rest of the water infrastructure stocks fared in Q1.
Trends towards conservation and reducing groundwater depletion are putting water infrastructure and treatment products front and center. Companies that can innovate and create solutions–especially automated or connected solutions–to address these thematic trends will create incremental demand and speed up replacement cycles. On the other hand, water infrastructure and treatment companies are at the whim of economic cycles. Consumer spending and interest rates, for example, can greatly impact the industrial production that drives demand for these companies’ offerings.
The 4 water infrastructure stocks we track reported an impressive Q1; on average, revenues beat analyst consensus estimates by 6.1%. Inflation progressed towards the Fed's 2% goal at the end of 2023, leading to strong stock market performance. The start of 2024 has been a bumpier ride, as the market switches between optimism and pessimism around rate cuts due to mixed inflation data, and water infrastructure stocks have held roughly steady amidst all this, with share prices up 4.2% on average since the previous earnings results.
Best Q1: Mueller Water Products (NYSE:MWA)
As one of the oldest companies in the water infrastructure industry, Mueller (NYSE:MWA) is a provider of water infrastructure products and flow control systems for various sectors.
Mueller Water Products reported revenues of $353.4 million, up 6.2% year on year, exceeding analysts' expectations by 18%. Overall, it was an incredible quarter for the company with an impressive beat of analysts' organic revenue and earnings estimates.
“We had a fantastic second quarter reflecting the progress our teams have made executing our operational and commercial initiatives to deliver long-term sustainable growth. We achieved record quarterly net sales with a strong sequential increase in volumes supported by our continued enhancements in customer experience. Our ongoing manufacturing and supply chain efficiencies drove significant improvement in margins, leading to our highest quarterly gross margin in more than seven years and record quarterly earnings,” said Martie Edmunds Zakas, Chief Executive Officer of Mueller Water Products.
Mueller Water Products achieved the biggest analyst estimates beat of the whole group. The stock is up 23.2% since reporting and currently trades at $20.38.
Is now the time to buy Mueller Water Products? Access our full analysis of the earnings results here, it's free.
Watts Water Technologies (NYSE:WTS)
Founded in 1874, Watts Water (NYSE:WTS) specializes in manufacturing water products and systems for residential, commercial, and industrial applications globally.
Watts Water Technologies reported revenues of $570.9 million, up 21% year on year, outperforming analysts' expectations by 4.6%. It was a stunning quarter for the company with an impressive beat of analysts' organic revenue estimates and a decent beat of analysts' earnings estimates.
Although it had a great quarter compared its peers, the market seems unhappy with the results as the stock is down 4.8% since reporting. It currently trades at $202.
Is now the time to buy Watts Water Technologies? Access our full analysis of the earnings results here, it's free.
Xylem (NYSE:XYL)
Formed through a spinoff, Xylem (NYSE:XYL) manufactures and services engineered products across a wide variety of applications primarily in the water sector.
Xylem reported revenues of $2.03 billion, up 40.4% year on year, exceeding analysts' expectations by 1.8%. It was still a strong quarter for the company with a solid beat of analysts' organic revenue estimates and a decent beat of analysts' earnings estimates.
Interestingly, the stock is up 4.7% since the results and currently trades at $137.13.
Read our full analysis of Xylem's results here.
Tennant (NYSE:TNC)
As the world’s largest manufacturer of autonomous mobile robots, Tennant (NYSE:TNC) designs, manufactures, and sells cleaning products to various sectors.
Tennant reported revenues of $311 million, up 1.7% year on year, in line with analysts' expectations. Revenue aside, it was a very strong quarter for the company with an impressive beat of analysts' earnings estimates.
Tennant had the weakest performance against analyst estimates and slowest revenue growth among its peers. The stock is down 6.5% since reporting and currently trades at $108.22.
Read our full, actionable report on Tennant here, it's free.
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