TTEK - Mueller Water Products: Good Growth Prospects And Potential For Re-Rating
2024-05-18 08:00:23 ET
Summary
- Mueller Water Products is well-positioned for growth due to pricing increases, resilient municipal R&R activity and improving new residential construction market.
- Margins are expected to benefit from price increases, operating leverage, cost reductions, and improved productivity, as well as the ramping up of production in a new foundry.
- Valuation multiple can re-rate if the company continues to execute well.
Investment Thesis
I last covered Mueller Water Products ( MWA ) with a buy rating in May 2023 and the stock is up ~36% since then. Looking forward, MWA is well-positioned to deliver good growth prospects in the coming quarters. The company's revenue growth should benefit from pricing increases and strength in the Municipal Repair and Replacement (R&R) end market driven by pent-up demand for R&R activities. Additionally, improving conditions in the new residential construction end market and the completion of channel inventory destocking in iron gates and hydrants should further help revenues. In the medium to long term, increased spending from IIJA should drive demand for the company's products, supporting revenue growth....
Mueller Water Products: Good Growth Prospects And Potential For Re-Rating