Mueller Industries (NYSE: MLI)
Quality Value Investing Research Report | $MLI Updated Coverage | May 2024
Summary:
Mueller Industries, Inc. is a dividend-paying small-cap stock in the industrials sector's machinery, supplies, and components industry.
The company has a narrow economic moat rating based on its long history of outstanding returns on invested capital.
Mueller's high-quality business model and sector and market-beating share price continue accelerating despite near-sighted traders' concerns.
QVI maintains its coverage rating of Mueller Industries in the Expanded Real-Time Stock Picks as a result of this updated research report.
When referencing this research report, access your Quality Value Investing (QVI) Glossary of Investing Terms and Metric Targets and Research Report Format Guide. Unless noted, all data presented is sourced from Seeking Alpha Premium as of the market close on May 15, 2024, and intended for illustration only.
In this updated coverage QVI Research Report, we’ll reexamine the Expanded Real-Time Stock Picks industrials’ sector holding, Mueller Industries, Inc., to see if it continues to meet Quality Value Investing’s criteria based on our checklist analysis of the business’s current wealth and its stock’s present value.
Mueller Industries: Company Current Wealth
Value Proposition
Mueller Industries, Inc. MLI 0.00%↑ is a dividend-paying small-cap stock in the industrials sector’s machinery, supplies, and components industry. It was added to the QVI Real-Time Stock Picks on March 17, 2022, at $28.46 cost basis per share.
Mueller Industries Inc. manufactures and sells copper, brass, aluminum, and plastic products in the United States, the United Kingdom, Canada, South Korea, the Middle East, China, and Mexico. It operates through three segments: Piping Systems, Industrial Metals, and Climate. Mueller Industries, Inc. was founded in 1917 and is headquartered in Collierville, Tennessee, USA.
Economic Moat
Morningstar does not cover or assign Mueller Industries a moat rating. QVI allocates Mueller Industries a narrow economic moat rating based on an enduring history in the piping, metals, and climate businesses and its outstanding returns on invested capital.
QVI’s Value Proposition Elevator Pitch for MLI:
Mueller Industries is a boring yet fundamentally sound industrial staple, commodity prices and construction business cycles notwithstanding.
QVI’s value proposition rating for Mueller Industries: Bullish.
Returns on Management
Revenue Growth and Net Profit Margin
Per the chart below, Mueller Industries’s trailing three-year annualized revenue growth was low-double-digits and outperformed the industrials sector’s +5.14% median growth. The company’s topline growth was -16.55% for the most recently reported twelve months.
Farther down the income statement, Mueller Industries’s three-year, mid-double-digit net profit margin beat the sector’s median net margin of +5.93%.
Returns on Equity and Invested Capital
Mueller Industries’s senior management produced a three-year double-digit return on equity, or ROE, above QVI’s targeted threshold and higher than the sector’s median ROE of +12.37%.
Stock buyback programs often elevate ROE. For example, Mueller Industries announced an expansion through July 2024 of its current repurchase program.
Mueller Industries’s three-year return on invested capital, or ROIC, was above QVI’s threshold and ahead of the sector’s median ROIC of +7.15%. Moreover, MLI’s ROIC exceeded its weighted average cost of capital, or WACC, of 11.44%, demonstrating that its senior executives are outstanding capital allocators. (Source of WACC: GuruFocus)
QVI’s business fundamentals rating for Mueller Industries.: Bullish.
Next, we’ll look at the company’s returns on management chart, enterprise downsize risks, the stock price’s present value, share price downside risks, and the investment thesis, each exclusive to Quality Value Investing’s premium (paying) subscribers.
Disclosure: At the time of this writing, I/we had no beneficial ownership of MLI common shares but may soon initiate a long position in our family portfolio. I wrote this report myself, and it expresses my own opinions. I am not receiving compensation for it other than from Substack paid subscriptions. I have no business relationship with any company whose stock is mentioned in this post.
Additional Disclosure: Quality Value Investing by David J. Waldron’s primary ticker research reports are for informational purposes only. The accuracy of the data cannot be guaranteed. Narrative and analytics are impersonal, i.e., not tailored to individual needs nor intended for portfolio construction beyond his family portfolio, which is presented solely for educational purposes. David is an individual investor and author, not an investment adviser. Readers should always engage in their own research or due diligence and consider (as appropriate) consulting a fee-only certified financial planner, licensed discount broker/dealer, flat fee registered investment adviser, certified public accountant, or specialized attorney before making any investment, income tax, or estate planning decisions.