Mueller Water Products's (NYSE:MWA) Q3 Sales Beat Estimates

Water infrastructure products manufacturer Mueller Water Products beat Wall Street’s revenue expectations 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.

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“We achieved an outstanding finish to another record year with our fourth quarter net sales and adjusted EBITDA exceeding the high-end of our expectations. Our team’s unwavering commitment and relentless focus on operational excellence and customer service enabled us to grow volumes and drive meaningful margin expansion, even as they navigated a complex external operating environment. I am incredibly proud of how our organization continues to execute our strategy and deliver value for all stakeholders,” said Martie Edmunds Zakas, Chief Executive Officer of Mueller Water Products.

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.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Mueller Water Products grew its sales at a decent 8.2% compounded annual growth rate. Its growth was slightly above the average industrials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. 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.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

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.

This quarter, 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.

Earnings Per Share

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%.

Key Takeaways from Mueller Water Products’s Q3 Results

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.

Mueller Water Products may have had a good quarter, but does that mean you should invest right now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.