Mueller Water Products

In the Q2 earnings season for water infrastructure stocks, Mueller Water Products reported revenues of $395.9 million, up 4.1% year on year, exceeding analysts' expectations by 1.2%, and delivered a very strong quarter with beats on EPS and EBITDA estimates, though it gave the weakest full-year guidance update in the group. Among the five tracked companies, Watts Water Technologies was the best performer, with revenues of $763.2 million, up 18.6% year on year, beating expectations by 4.9%, while Tennant was the weakest, with revenues of $324 million, up 1.7%, missing estimates by 1.7% and providing disappointing EBITDA guidance. Energy Recovery saw revenues plummet 57.2% to $12 million, missing estimates by 36.3%, and Xylem reported revenues of $2.34 billion, up 1.5%, meeting expectations. As a group, the companies' revenues missed consensus estimates by 6.4%, and their shares have declined on average 9.4% since the latest earnings results.

Mueller Water Products raised its fiscal 2026 adjusted EBITDA guidance to a range of $367 million to $372 million after reporting record third-quarter results. Net sales rose 4.1% to $395.9 million, adjusted EBITDA increased 24.3% to a record $107.4 million, and adjusted diluted earnings per share climbed 47.1% to $0.50. The company benefited from pricing actions, tariff refunds, cost controls, and resilient municipal infrastructure demand, with Water Management Solutions sales up 10.3% and adjusted EBITDA surging 43.6%. Management cautioned that no further tariff refunds are expected and that tariff-related costs and seasonal pressures will affect the fourth quarter, while also narrowing its full-year net-sales growth forecast to 2.8% to 3.5%.

Enovis, Insteel Industries, Mueller Water Products, and Proto Labs are highlighted as growth stocks trading under $100 with strong long-term potential. Enovis saw 11% reconstructive sales growth in Q1 2026 and holds a Strong Buy consensus with a $42 average price target, roughly 91% above its current $22. Insteel Industries reported Q2 sales up 7.5% year over year, driven by infrastructure spending and record data center construction permits. Mueller Water Products posted Q2 net sales up 4.6% and benefits from $55 billion in federal water infrastructure funding. Proto Labs is pivoting from prototyping to production-grade manufacturing, with a $1.2 billion market cap and shares at $80.

Mueller Water Products, trading at $25.89 per share, has posted a modest 4.3% return over the past six months but demonstrates improving fundamentals. The company's operating margin expanded by 7.9 percentage points over the last five years to 19.2% on a trailing 12-month basis. Earnings per share grew at a 21.6% compound annual growth rate over the same period, outpacing its 7.9% annualized revenue growth. Free cash flow margin also increased by 6.6 percentage points over five years, reaching 9.6% for the trailing 12 months.

Mueller Water Products reported a 12.2% year-over-year increase in Water Management Solutions sales during its fiscal second quarter, as the company positions its leak-detection technology to help utilities preserve capacity against growing demand from AI data centers. The segment includes hydrants, valves, pipe repair, pressure management, metering, leak detection, and related software. Mueller’s EchoShore leak-monitoring technology has helped clients identify an estimated 7.7 billion gallons of water loss since 2020, with a goal of 18 billion gallons by 2029. The company’s Sentryx Water Intelligence platform provides utilities with data on pressure, flow, leaks, chlorine, and pH, enabling pipe repair and non-revenue water reduction to free up capacity without new infrastructure.