Is Now The Time To Look At Buying Mueller Industries, Inc. (NYSE:MLI)?

By
Simply Wall St
Published
January 12, 2022
NYSE:MLI
Source: Shutterstock

Mueller Industries, Inc. (NYSE:MLI), might not be a large cap stock, but it saw a significant share price rise of over 20% in the past couple of months on the NYSE. As a US$3.3b market-cap stock, it seems odd Mueller Industries is not more well-covered by analysts. Although, there is more of an opportunity for mispricing in stocks with low coverage, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today I will analyse the most recent data on Mueller Industries’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Mueller Industries

What is Mueller Industries worth?

Good news, investors! Mueller Industries is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Mueller Industries’s ratio of 8.71x is below its peer average of 29.72x, which indicates the stock is trading at a lower price compared to the Machinery industry. Although, there may be another chance to buy again in the future. This is because Mueller Industries’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Can we expect growth from Mueller Industries?

earnings-and-revenue-growth
NYSE:MLI Earnings and Revenue Growth January 12th 2022

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of Mueller Industries, it is expected to deliver a relatively unexciting top-line growth of 7.9% over the next year, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since MLI is currently trading below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on MLI for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy MLI. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed assessment.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For example - Mueller Industries has 1 warning sign we think you should be aware of.

If you are no longer interested in Mueller Industries, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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