Mueller Water Products, Inc. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

Mueller Water Products, Inc. (NYSE:MWA) just released its quarterly report and things are looking bullish. It was a solid earnings report, with revenues and statutory earnings per share (EPS) both coming in strong. Revenues were 18% higher than the analysts had forecast, at US$353m, while EPS were US$0.28 beating analyst models by 107%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Mueller Water Products after the latest results.

Check out our latest analysis for Mueller Water Products

Taking into account the latest results, Mueller Water Products' six analysts currently expect revenues in 2024 to be US$1.26b, approximately in line with the last 12 months. Per-share earnings are expected to bounce 26% to US$0.81. In the lead-up to this report, the analysts had been modelling revenues of US$1.22b and earnings per share (EPS) of US$0.63 in 2024. So it seems there's been a definite increase in optimism about Mueller Water Products' future following the latest results, with a very substantial lift in the earnings per share forecasts in particular.

With these upgrades, we're not surprised to see that the analysts have lifted their price target 15% to US$21.17per share. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Mueller Water Products analyst has a price target of US$24.00 per share, while the most pessimistic values it at US$19.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Mueller Water Products is an easy business to forecast or the the analysts are all using similar assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Mueller Water Products' revenue growth is expected to slow, with the forecast 3.3% annualised growth rate until the end of 2024 being well below the historical 7.4% p.a. growth over the last five years. Compare this to the 173 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 3.7% per year. Factoring in the forecast slowdown in growth, it looks like Mueller Water Products is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Mueller Water Products' earnings potential next year. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Mueller Water Products going out to 2026, and you can see them free on our platform here..

And what about risks? Every company has them, and we've spotted 1 warning sign for Mueller Water Products you should know about.

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

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.