Analysis: Mueller Water Products (MWA)

As USA dangles funding for water infrastructure projects, MWA surges.

Water Sector LTP initiated coverage of Mueller Water Products, Inc. (NYSE:MWA) on 10/8/25 when the stock closed at $25.81.

MWA’s stock price hit a five-year low on 9/19/22, at $10.04. Then MWA gradually rose to its all-time high on 3/19/25 at $28.24. In the past seven months it has settled back to $25.85 (today is 10/22/25).

Company

With headquarters in Atlanta, MWA is a manufacturer and marketer of products used in the transmission, distribution and measurement of water in North America. Its portfolio includes engineered valves, fire hydrants, pipe connection and repair products, metering products, leak detection, pipe condition assessment, pressure management products, and software that provides critical water system data. Sales to municipalities accounts for more than 60% of revenue, while the construction industries (residential and non-residential) account for the rest.

MWA operates ten manufacturing facilities located in the USA, Israel, and China. The company spends more than $20 million each year on R&D (2024 net sales were $1.3 billion), with research facilities in USA, Canada, Israel, and UK. Its market cap is $4.01 billion.

There are only a few competitors for most of MWA’s products, but they tend to be well established with strong brand recognition.

Quantities

Over the past few years, MWA has shown strong momentum in net sales, operating margin, net profit, and net cash assets. Its growth in earnings per share over the past five years has been “spectacular” (16.8% compounded annually, per StockStory.org). Its debt is modest, and its P/E ratio of 26.5 is better than the industry average of 31.3 (StockRover.com). Its fiscal 3rd quarter of 2025, ending 6/30/25, was impressive – with revenue up 6% year-over-year.

Tailwind

Because of aging water and wastewater systems nationwide, and the need for modern stormwater systems; and as long as increasing population, contamination, and climate-related disasters threaten the supply of clean water, the water tech sector will enjoy “long-term acceleration of demand,” in the words of Simply Wall St, for infrastructure improvement, replacement, and innovation.

Optimistic analysts believe that upgrading water systems is not optional – cities and districts will fund water infrastructure projects any which way they can no matter what, because people (and crops) can’t live without clean water. "There will always be money for water," the optimists say.

Where will municipalities, MWA’s biggest customers, find the money for the water infrastructure projects today and in 10 years? They have varying funding sources, including local and state taxes, bonds, loans, and grants. The federal government provides funding primarily from the 2021 Infrastructure Investment and Jobs Act, which allocated $55 billion for drinking water, wastewater, and stormwater projects. The EPA provides low-interest loans for certain nationally significant water infrastructure projects through the 2014 Water Infrastructure Finance and Innovation Act. There is also some money left over for water projects from the 2021 American Rescue Plan Act. But wait a minute. What if some of MWA’s biggest customers – like New York City – suddenly have much less money to spend on water projects?

Headwind

The White House this year has delayed or canceled billions of dollars’ worth of “low priority” infrastructure projects, including water infrastructure. Since the government shutdown this month, OMB's Vought has targeted Democratic states like New York for delays and cancellations. Trump has promoted privatization of public water systems and shifting the financial burden for maintenance and safety to state and local governments and utility customers.

There will always be money for water? I am a Malthusian, and I don’t have unconditional faith in human resourcefulness. Wealthy families and communities will certainly commandeer the resources they need, but – especially when government is managed by retributive kleptocrats – there is no guarantee that water infrastructure improvement will be distributed widely or equitably. From a long-term perspective (LTP), don’t count on the Trump administration to resume funding the IIJA or WIFIA or any other water infrastructure funding program.

If municipalities can’t rely on the federal government for infrastructure funding, they will eventually find other sources. One possibility is regional alliances and coalitions. The eight Great Lakes states, for example, already have a regional governing structure, based on their shared interest in freshwater resources in the lakes. The Great Lakes St. Lawrence Cities Initiative was founded in 2003. The Great Lakes St. Lawrence Governors and Premiers was founded in 2009, after the Great Lakes Compact was ratified by the U.S. Congress. Other regions of the USA and Canada will, I believe, form alliances and coalitions based on shared riparian interests and regional infrastructure needs.*

Recommendation

From a short-term perspective, the water sector may experience a crunch due to delays in federal funding for infrastructure projects. But LTP, there will aways be money for water – not necessarily everywhere, but in areas with financial resources. The water sector may consolidate as funding contracts and funding sources shift from federal to regional. Mueller is well positioned to survive and thrive in such an environment. Water Sector LTP issues a BUY recommendation for MWA on 10/22/25. The stock closed on the previous day at $25.85.

* Dave Freedman earned a bachelor’s degree in geography from University of Illinois at Chicago in 1977.