Water Infrastructure Stocks Q4 Recap: Benchmarking Mueller Water Products (NYSE:MWA)

As the Q4 earnings season wraps, let’s dig into this quarter’s best and worst performers in the water infrastructure industry, including Mueller Water Products (NYSE:MWA) and its peers.

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.

The 5 water infrastructure stocks we track reported a slower Q4. As a group, revenues missed analysts’ consensus estimates by 4.5%.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 12.9% since the latest earnings results.

Mueller Water Products (NYSE:MWA)

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.

Mueller Water Products reported revenues of $318.2 million, up 4.6% year on year. This print exceeded analysts’ expectations by 2%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ adjusted operating income estimates and full-year EBITDA guidance beating analysts’ expectations.

“We are pleased with the great start to our fiscal year, with solid net sales growth and year-over-year adjusted EBITDA margin expansion. Our continued focus on delivering outstanding customer service and operational excellence, along with resilient end-market demand, led to first-quarter records for net sales, adjusted EBITDA and adjusted EBITDA margin,” said Martie Edmunds Zakas, Chief Executive Officer of Mueller Water Products.

Interestingly, the stock is up 1.7% since reporting and currently trades at $28.

We think Mueller Water Products is a good business, but is it a buy today? Read our full report here, it’s free.

Best Q4: Watts Water Technologies (NYSE:WTS)

Founded in 1874, Watts Water (NYSE:WTS) specializes in manufacturing water products and systems for residential, commercial, and industrial applications globally.

Watts Water Technologies reported revenues of $625.1 million, up 15.7% year on year, outperforming analysts’ expectations by 2.3%. The business had an exceptional quarter with an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ adjusted operating income estimates.

Watts Water Technologies pulled off the biggest analyst estimates beat and fastest revenue growth among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 2.1% since reporting. It currently trades at $308.07.

Is now the time to buy Watts Water Technologies? Access our full analysis of the earnings results here, it’s free.

Weakest Q4: Energy Recovery (NASDAQ:ERII)

Having saved far more than a trillion gallons of water, Energy Recovery (NASDAQ:ERII) provides energy recovery devices to the water treatment, oil and gas, and chemical processing sectors.

Energy Recovery reported revenues of $66.87 million, flat year on year, falling short of analysts’ expectations by 19%. It was a disappointing quarter as it posted a significant miss of analysts’ revenue estimates and a significant miss of analysts’ EBITDA estimates.

Energy Recovery delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 26.7% since the results and currently trades at $11.81.

Read our full analysis of Energy Recovery’s results here.

Xylem (NYSE:XYL)

Formed through a spinoff, Xylem (NYSE:XYL) manufactures and services engineered products across a wide variety of applications primarily in the water sector.

Xylem reported revenues of $2.40 billion, up 6.3% year on year. This result topped analysts’ expectations by 1.1%. Overall, it was a strong quarter as it also put up an impressive beat of analysts’ organic revenue estimates and a solid beat of analysts’ EBITDA estimates.

Xylem had the weakest full-year guidance update among its peers. The stock is down 12.4% since reporting and currently trades at $122.82.

Read our full, actionable report on Xylem here, it’s free.

Tennant (NYSE:TNC)

As the world’s largest manufacturer of autonomous mobile robots, Tennant (NYSE:TNC) designs, manufactures, and sells cleaning products to various sectors.

Tennant reported revenues of $291.6 million, down 11.3% year on year. This print missed analysts’ expectations by 9%. It was a disappointing quarter as it also logged full-year EBITDA guidance missing analysts’ expectations significantly and a significant miss of analysts’ revenue estimates.

Read our full, actionable report on Tennant here, it’s free.

Market Update

The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.

Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.