Earnings results often indicate what direction a company will take in the months ahead. With Q3 behind us, let’s have a look at Mueller Water Products (NYSE: MWA) and its peers.
Trends towards conservation and reducing groundwater depletion are putting water infrastructure and treatment products front and center. Companies that can innovate and create solutions–especially automated or connected solutions–to address these thematic trends will create incremental demand and speed up replacement cycles. On the other hand, water infrastructure and treatment companies are at the whim of economic cycles. Consumer spending and interest rates, for example, can greatly impact the industrial production that drives demand for these companies’ offerings.
The 5 water infrastructure stocks we track reported a very strong Q3. As a group, revenues beat analysts’ consensus estimates by 3.8%.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 6.3% since the latest earnings results.
Mueller Water Products (NYSE: MWA)
As one of the oldest companies in the water infrastructure industry, Mueller (NYSE: MWA) is a provider of water infrastructure products and flow control systems for various sectors.
Mueller Water Products reported revenues of $380.8 million, up 9.4% year on year. This print exceeded analysts’ expectations by 5.2%. Overall, it was a very strong quarter for the company with a solid beat of analysts’ organic revenue estimates and an impressive beat of analysts’ revenue estimates.
“We achieved an outstanding finish to another record year with our fourth quarter net sales and adjusted EBITDA exceeding the high-end of our expectations. Our team’s unwavering commitment and relentless focus on operational excellence and customer service enabled us to grow volumes and drive meaningful margin expansion, even as they navigated a complex external operating environment. I am incredibly proud of how our organization continues to execute our strategy and deliver value for all stakeholders,” said Martie Edmunds Zakas, Chief Executive Officer of Mueller Water Products.
Mueller Water Products delivered the weakest full-year guidance update of the whole group. Unsurprisingly, the stock is down 5.7% since reporting and currently trades at $23.57.
Best Q3: Watts Water Technologies (NYSE: WTS)
Founded in 1874, Watts Water (NYSE: WTS) specializes in manufacturing water products and systems for residential, commercial, and industrial applications globally.
Watts Water Technologies reported revenues of $611.7 million, up 12.5% year on year, outperforming analysts’ expectations by 6.2%. The business had a stunning quarter with an impressive beat of analysts’ organic revenue estimates and a solid beat of analysts’ EBITDA estimates.
Watts Water Technologies scored the fastest revenue growth among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 2.1% since reporting. It currently trades at $276.37.
Is now the time to buy Watts Water Technologies? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q3: Tennant (NYSE: TNC)
As the world’s largest manufacturer of autonomous mobile robots, Tennant (NYSE: TNC) designs, manufactures, and sells cleaning products to various sectors.
Tennant reported revenues of $303.3 million, down 4% year on year, falling short of analysts’ expectations by 0.9%. It was a slower quarter as it posted a significant miss of analysts’ EPS and revenue estimates.
Tennant delivered the highest full-year guidance raise but had the weakest performance against analyst estimates in the group. As expected, the stock is down 7.2% since the results and currently trades at $74.01.
Read our full analysis of Tennant’s results here.
Energy Recovery (NASDAQ: ERII)
Having saved far more than a trillion gallons of water, Energy Recovery (NASDAQ: ERII) provides energy recovery devices to the water treatment, oil and gas, and chemical processing sectors.
Energy Recovery reported revenues of $32 million, down 17.1% year on year. This result topped analysts’ expectations by 6.9%. Overall, it was a strong quarter as it also put up a solid beat of analysts’ revenue estimates and a beat of analysts’ EPS estimates.
Energy Recovery achieved the biggest analyst estimates beat but had the slowest revenue growth among its peers. The stock is down 17.3% since reporting and currently trades at $14.26.
Read our full, actionable report on Energy Recovery here, it’s free for active Edge members.
Xylem (NYSE: XYL)
Formed through a spinoff, Xylem (NYSE: XYL) manufactures and services engineered products across a wide variety of applications primarily in the water sector.
Xylem reported revenues of $2.27 billion, up 7.8% year on year. This print beat analysts’ expectations by 1.9%. It was an exceptional quarter as it also produced an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ adjusted operating income estimates.
The stock is flat since reporting and currently trades at $150.29.
Read our full, actionable report on Xylem here, it’s free for active Edge members.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
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