Mueller Water Products (MWA)

Water infrastructure products manufacturer Mueller Water Products reported Q4 CY2025 results beating Wall Street’s revenue expectations, with sales up 4.6% year on year to $318.2 million. The company’s full-year revenue guidance of $1.48 billion at the midpoint came in 0.8% above analysts’ estimates. Its non-GAAP profit of $0.29 per share was 10.1% 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 performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Mueller Water Products grew its sales at a decent 7.9% compounded annual growth rate. 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 annualized revenue growth of 8.9% over the last two years is above its five-year trend, suggesting some bright spots.

This quarter, Mueller Water Products reported modest year-on-year revenue growth of 4.6% but beat Wall Street’s estimates by 2%.

Looking ahead, sell-side analysts expect revenue to grow 2.3% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and indicates its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.

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 32.9% gross margin over the last five years. Said differently, Mueller Water Products paid its suppliers $67.08 for every $100 in revenue.

Mueller Water Products’s gross profit margin came in at 37.6% this quarter, up 3.8 percentage points year on year. Mueller Water Products’s full-year margin has also been trending up over the past 12 months, increasing by 2.4 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).

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

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 13%.

Looking at the trend in its profitability, Mueller Water Products’s operating margin rose by 7.1 percentage points over the last five years, as its sales growth gave it immense operating leverage.

This quarter, Mueller Water Products generated an operating margin profit margin of 17.8%, up 2.2 percentage points year on year. Since its gross margin expanded more than its operating margin, we can infer that leverage on its cost of sales was the primary driver behind the recently higher efficiency.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Mueller Water Products’s EPS grew at an astounding 20.1% compounded annual growth rate over the last five years, higher than its 7.9% 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 7.1 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 more recent period because it can provide insight into an emerging theme or development for the business.

For Mueller Water Products, its two-year annual EPS growth of 45.2% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q4, Mueller Water Products reported adjusted EPS of $0.29, up from $0.25 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 $1.35 to grow 7.3%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because 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 8.4% 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 4.7 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 $44 million in Q4, equivalent to a 13.8% margin. This cash profitability was in line with the comparable period last year and above its five-year average.

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 12.7%, 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. Fortunately, Mueller Water Products’s 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.

Companies with more cash than debt have lower bankruptcy risk.

Mueller Water Products is a profitable, well-capitalized company with $459.6 million of cash and $452.3 million of debt on its balance sheet. This $7.3 million net cash position gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

It was great to see Mueller Water Products’s full-year EBITDA guidance top analysts’ expectations. We were also glad its EBITDA outperformed Wall Street’s estimates. Zooming out, we think this quarter featured some important positives. The stock remained flat at $27.73 immediately after reporting.

Updated: February 4, 2026 at 10:30 PM EST

Before making an investment decision, investors should account for Mueller Water Products’s business fundamentals and valuation in addition to what happened in the latest quarter.

Mueller Water Products is a high-quality business worth owning. For starters, its revenue growth was decent over the last five years. On top of that, its expanding operating margin shows the business has become more efficient, and 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 19x. Looking across the spectrum of industrials companies today, Mueller Water Products’s fundamentals shine bright. We like the stock at this price.

Wall Street analysts have a consensus one-year price target of $27.67 on the company (compared to the current share price of $27.73).