Mueller Water Products (MWA)

Water infrastructure products manufacturer Mueller Water Products announced better-than-expected revenue in Q3 CY2025, with sales up 9.4% year on year to $380.8 million. On the other hand, the company’s full-year revenue guidance of $1.46 billion at the midpoint came in 0.6% below analysts’ estimates. Its non-GAAP profit of $0.38 per share was 12.3% above analysts’ consensus estimates.

Company Overview

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.

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.

Competitors offering similar products include Xylem (NYSE:XYL), A.O. Smith (NYSE:AOS), and Watts Water (NYSE:WTS).

A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, Mueller Water Products’s 8.2% annualized revenue growth over the last five years was decent. Its growth was slightly above the average industrials company and shows its offerings resonate with customers.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Mueller Water Products’s recent performance shows its demand has slowed as its annualized revenue growth of 5.9% over the last two years was below its five-year trend.

This quarter, Mueller Water Products reported year-on-year revenue growth of 9.4%, and its $380.8 million of revenue exceeded Wall Street’s estimates by 5.2%.

Looking ahead, sell-side analysts expect revenue to grow 2.6% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and indicates its products and services will see some demand headwinds. At least the company is tracking well in other measures of financial health.

At StockStory, we prefer high gross margin businesses because they indicate the company has pricing power or differentiated products, giving it a chance to generate higher operating profits.

Mueller Water Products’s unit economics are better than the typical industrials business, signaling its products are somewhat differentiated through quality or brand. As you can see below, it averaged a decent 32.6% gross margin over the last five years. That means for every $100 in revenue, roughly $32.63 was left to spend on selling, marketing, R&D, and general administrative overhead.

This quarter, Mueller Water Products’s gross profit margin was 36.8%, up 4.9 percentage points year on year. Mueller Water Products’s full-year margin has also been trending up over the past 12 months, increasing by 1.3 percentage points. If this move continues, it could suggest better unit economics due to more leverage from its growing sales on the fixed portion of its cost of goods sold (such as manufacturing expenses).

Mueller Water Products has been an efficient company over the last five years. It was one of the more profitable businesses in the industrials sector, boasting an average operating margin of 12.7%.

Analyzing the trend in its profitability, Mueller Water Products’s operating margin rose by 6.4 percentage points over the last five years, as its sales growth gave it immense operating leverage.

In Q3, Mueller Water Products generated an operating margin profit margin of 18.3%, up 10.1 percentage points year on year. The increase was solid, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Mueller Water Products’s EPS grew at an astounding 20.8% compounded annual growth rate over the last five years, higher than its 8.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Mueller Water Products’s earnings to better understand the drivers of its performance. As we mentioned earlier, Mueller Water Products’s operating margin expanded by 6.4 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Mueller Water Products, its two-year annual EPS growth of 43.1% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q3, Mueller Water Products reported adjusted EPS of $0.38, up from $0.22 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Mueller Water Products’s full-year EPS of $1.31 to grow 7%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Mueller Water Products has shown impressive cash profitability, enabling it to ride out cyclical downturns more easily while maintaining its investments in new and existing offerings. The company’s free cash flow margin averaged 8.6% over the last five years, better than the broader industrials sector.

Taking a step back, we can see that Mueller Water Products’s margin expanded by 5.6 percentage points during that time. This is encouraging because it gives the company more optionality.

Mueller Water Products’s free cash flow clocked in at $98 million in Q3, equivalent to a 25.7% margin. This result was good as its margin was 5.7 percentage points higher than in the same quarter last year, building on its favorable historical trend.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Mueller Water Products’s five-year average ROIC was 12.4%, higher than most industrials businesses. This illustrates its management team’s ability to invest in profitable growth opportunities and generate value for shareholders.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Mueller Water Products’s ROIC has increased over the last few years. This is a great sign when paired with its already strong returns. It could suggest its competitive advantage or profitable growth opportunities are expanding.

Mueller Water Products reported $431.5 million of cash and $451.6 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $326.2 million of EBITDA over the last 12 months, we view Mueller Water Products’s 0.1× net-debt-to-EBITDA ratio as safe. We also see its $4.6 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by how significantly Mueller Water Products blew past analysts’ revenue expectations this quarter. We were also glad its EBITDA outperformed Wall Street’s estimates. On the other hand, its full-year revenue guidance slightly missed and its full-year EBITDA guidance was in line with Wall Street’s estimates. Overall, we think this was still a solid quarter with some key areas of upside. The stock traded up 3.4% to $25.85 immediately after reporting.

Updated: December 3, 2025 at 10:21 PM EST

Before deciding whether to buy Mueller Water Products or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

There are definitely a lot of things to like about Mueller Water Products. First off, its revenue growth was decent over the last five years. And while its projected EPS for the next year is lacking, its expanding operating margin shows the business has become more efficient. On top of that, its astounding EPS growth over the last five years shows its profits are trickling down to shareholders.

Mueller Water Products’s P/E ratio based on the next 12 months is 17.6x. Looking at the industrials landscape right now, Mueller Water Products trades at a pretty interesting price. If you believe in the company and its growth potential, now is an opportune time to buy shares.

Wall Street analysts have a consensus one-year price target of $27.67 on the company (compared to the current share price of $24.63), implying they see 12.4% upside in buying Mueller Water Products in the short term.