Is There Now An Opportunity In Mueller Water Products, Inc. (NYSE:MWA)?

Mueller Water Products, Inc. (NYSE:MWA), might not be a large cap stock, but it saw significant share price movement during recent months on the NYSE, rising to highs of US$16.54 and falling to the lows of US$12.31. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Mueller Water Products' current trading price of US$12.31 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Mueller Water Products’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Mueller Water Products

Is Mueller Water Products Still Cheap?

Good news, investors! Mueller Water Products is still a bargain right now. My valuation model shows that the intrinsic value for the stock is $15.90, but it is currently trading at US$12.31 on the share market, meaning that there is still an opportunity to buy now. However, given that Mueller Water Products’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Mueller Water Products generate?

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. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Mueller Water Products' earnings over the next few years are expected to increase by 63%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? Since MWA is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

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

So while earnings quality is important, it's equally important to consider the risks facing Mueller Water Products at this point in time. For example, Mueller Water Products has 2 warning signs (and 1 which is significant) we think you should know about.

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

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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.