Why Mueller Industries is Drawing Attention Now
Mueller Industries (MLI) is back on many watchlists after a period of relatively flat performance over the past 3 months. This has prompted investors to reassess its recent returns and fundamentals.
See our latest analysis for Mueller Industries.
At a share price of $113.91, Mueller Industries has seen recent pressure with a 7 day share price return of 4.04% and year to date share price return of 2.48%. However, its 1 year total shareholder return of 46.13% and 5 year total shareholder return of 456.52% point to a very strong longer term outcome, which helps frame current moves as more of a pause than a break in sentiment.
If recent moves in Mueller Industries have you reassessing your watchlist, it could be a good moment to broaden your search and check out 20 top founder-led companies as potential next ideas.
With a recent share price of $113.91, revenue of about $4.18b and net income of roughly $765.19m, plus a value score of 4 and an indicated discount to some valuation metrics, is there still a buying opportunity here, or is the market already pricing in future growth?
Price-to-Earnings of 16.5x: Is It Justified?
On a P/E of 16.5x at a last close of $113.91, Mueller Industries screens as good value compared with peers and some fair value markers based on current earnings.
The P/E multiple compares the current share price to earnings per share, so it effectively tells you how much investors are paying for each dollar of current profits. For a manufacturer of copper, brass and aluminum products operating across plumbing, HVAC and industrial markets, earnings power and its consistency often matter more than rapid top line growth when investors are sizing up this ratio.
According to the SWS checks, Mueller Industries trades at good value versus the US Machinery industry average P/E of 27x and a peer average of 28.6x. The estimated fair P/E from their model sits higher at 24x. That implies the current 16.5x level is materially lower than where the fair ratio could sit if the market moved closer to that reference point, especially given earnings growth of 26.5% over the past year and a Return on Equity of 23.9%.
With that context in mind, if you want to see how this fair P/E benchmark is derived and updated, take a closer look at the SWS fair ratio view for Mueller Industries through Explore the SWS fair ratio for Mueller Industries.
Result: Price-to-Earnings of 16.5x (UNDERVALUED)
However, you still need to weigh risks such as recent short term share price declines and exposure to cyclical construction and HVAC demand, which could pressure sentiment.
Find out about the key risks to this Mueller Industries narrative.
Another Take Using Cash Flows
While the P/E of 16.5x suggests good value versus peers and the fair ratio, our DCF model points the same way, with Mueller Industries at $113.91 compared with an estimated future cash flow value of $137.85. If both signals line up, the question is what might close that gap, and when.
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Mueller Industries for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 50 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Next Steps
If this mix of positives and concerns feels balanced to you, this may be a good moment to look through the numbers yourself and decide where you stand. Then weigh up 4 key rewards and 1 important warning sign to see how that risk and reward profile lines up with your own view.
Looking for more investment ideas?
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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