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Why Mueller Industries is on investors' radar right now
Mueller Industries (MLI) has quietly drawn fresh attention after recent share price moves, with the stock showing a mix of short term volatility and stronger returns over the past year and past 3 months.
That shift is prompting investors to revisit the company's underlying business, including how its copper, brass, and aluminum product lines, along with its current profitability and revenue profile, compare with the recent share performance.
See our latest analysis for Mueller Industries.
At a share price of $136.14, Mueller Industries has given investors a 16.6% year to date share price return and a 1 year total shareholder return of 74.8%, while the 5 year total shareholder return is close to 7x. This points to momentum that has recently been building faster in the short term than in the very near term, where the 1 day move was a 0.9% decline.
If this kind of move has you looking beyond a single name, it could be a good moment to scan fast growing stocks with high insider ownership for other fast moving ideas with strong insider alignment.
With the shares now close to analyst targets and trading at a premium to some estimates of intrinsic value, the question is whether Mueller Industries is still mispriced or if the market is already incorporating expectations of future growth.
Preferred P/E of 20.2x: Is it justified?
On a P/E of 20.2x, Mueller Industries is priced below several reference points, even after a strong share price run to $136.14.
The P/E ratio compares the current share price to earnings per share, so it effectively reflects how much investors are paying for each dollar of current earnings. For a manufacturer with established operations across piping systems, industrial metals, and climate products, this is a common way investors think about valuation because earnings tend to be a key focus.
Here, Mueller Industries screens as good value in a few different ways. Its 20.2x P/E is below the estimated fair P/E of 22.7x, it is below the US Machinery industry average of 27.6x, and it is also below the peer average of 29.5x. Combined with high quality earnings, a 24.5% Return on Equity and profit margins that are higher than last year, the current multiple suggests the market is not assigning the same level of earnings premium that many similar names trade on, even though earnings have been growing and are forecast to keep growing.
Relative to the Machinery industry and close peers, the gap is sizeable. Investors in the sector are, on average, paying much more for each dollar of earnings than the 20.2x being applied to Mueller Industries. The fair P/E estimate also points to a level the market could move toward if sentiment or expectations align with those benchmarks.
Explore the SWS fair ratio for Mueller Industries
Result: Price-to-Earnings of 20.2x (UNDERVALUED)
However, you also have to weigh risks such as exposure to cyclical construction and HVAC demand, as well as the possibility that earnings or margins may fall short of current expectations.
Find out about the key risks to this Mueller Industries narrative.
Another angle from our DCF model
While the P/E of 20.2x makes Mueller Industries look cheap next to peers and the Machinery industry, our DCF model points in the other direction. On that view, the current $136.14 share price sits above an estimated future cash flow value of $125.65. This raises the question of whether the P/E gap represents an opportunity or a potential valuation risk.
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 875 undervalued stocks based on their cash flows . If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Build Your Own Mueller Industries Narrative
If you see the numbers differently or prefer to work through the data yourself, you can build your own view in minutes by starting with Do it your way .
A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Mueller Industries.
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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.
Companies discussed in this article include MLI .
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