Mueller Industries (MLI): Assessing Valuation After a Strong Year of Share Price Gains

Mueller Industries (MLI) has been quietly rewarding patient shareholders, with the stock up about 5% over the past month and roughly 46% over the past year, outpacing many industrial peers.

See our latest analysis for Mueller Industries.

At a share price of $113.49, Mueller Industries has built a strong uptrend, with a 90 day share price return of 16.35% feeding into a robust 1 year total shareholder return of 45.8%. This suggests momentum is still very much on its side.

If this kind of steady compounding appeals to you, it could be a good moment to explore other industrial names via fast growing stocks with high insider ownership and see what else is quietly gaining traction.

The rally has been impressive, but with earnings still climbing and the share price already near record highs, is Mueller Industries trading below its true worth, or are investors fully pricing in the next leg of growth?

Price-to-Earnings of 16.8x: Is it justified?

Mueller Industries currently trades on a price-to-earnings ratio of 16.8 times, which looks modest given its strong share price and earnings trajectory.

The price-to-earnings ratio compares what investors pay today with the company’s per share earnings, making it a straightforward gauge of how the market is valuing its profit stream.

In Mueller Industries’ case, a 16.8 times multiple appears restrained when set against both the wider US market on 18.7 times and the US Machinery industry at 25.5 times. This is especially notable given earnings growth of 27.8% over the last year and an estimated fair price-to-earnings ratio of 20.5 times that the market could gravitate toward if performance holds up.

Against peers and the broader industry, Mueller Industries is trading on a distinctly lower earnings multiple. This reinforces the impression that investors are paying a discount price for a company that has both high quality earnings and returns on equity considered high at 24.5%.

Explore the SWS fair ratio for Mueller Industries

Result: Price-to-Earnings of 16.8x (UNDERVALUED)

However, investors should watch for a slowdown in construction or HVAC demand, as well as any sustained margin pressure from metal price volatility, which could cap further upside.

Find out about the key risks to this Mueller Industries narrative.

Another View: What Does Our DCF Say?

Our DCF model paints a cooler picture, putting Mueller Industries fair value near $101.38, below the current $113.49 share price. That implies the stock may be slightly overvalued on cash flow assumptions and raises the question of whether recent momentum has already pulled forward some future returns.

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 906 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 want to dig into the details yourself, you can build a personalized view in minutes: Do it your way.

A great starting point for your Mueller Industries research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

Ready for your next investing move?

Right now is a powerful moment to widen your opportunity set with focused stock ideas from the Simply Wall St Screener, before the market fully catches on.

• Tap into high-income potential with these 15 dividend stocks with yields > 3% that can strengthen your portfolio’s cash flow while others overlook reliable payers.
• Ride powerful tech tailwinds through these 26 AI penny stocks targeting companies shaping the future with real AI-driven revenue growth.
• Position ahead of the curve by scanning these 81 cryptocurrency and blockchain stocks where traditional finance and digital assets are colliding to create new profit pools.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com