XYL - Mueller Looks Undervalued And Has A Few Positive Drivers

• Mueller Water didn't get much love for a quarter that came in 2% ahead of expectations on revenue (up double-digits) and roughly 20% ahead on operating income.
• Management raised guidance, and both residential construction activity and permitting remain quite strong.
• Technologies remain a money-losing disappointment, but integrating more technology into Infrastructure products could be an underappreciated driver.
• Management is partway through a manufacturing upgrade program that has inflated capex spending but should drive better margins and new sales opportunities in a few years.
• Mueller looks undervalued today and may finally start to close some of its performance gap with the broader industrial sector.

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