Water infrastructure products manufacturer Mueller Water Products reported revenue ahead of Wall Street’s expectations in Q2 CY2026, with sales up 4.1% year on year to $395.9 million. On the other hand, the company’s full-year revenue guidance of $1.48 billion at the midpoint came in 0.6% below analysts’ estimates. Its non-GAAP profit of $0.50 per share was 27.4% above analysts’ consensus estimates.

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“Our outstanding third quarter results reflect strong execution across the business and continued progress against our operating priorities, despite a dynamic operating environment. We delivered quarterly records for net sales, adjusted EBITDA and adjusted net income per diluted share, while expanding our adjusted EBITDA margin 440 basis points year-over-year. These results demonstrate the strength of our brands and product portfolio, as well as the benefits from our continued focus on operational excellence, productivity and disciplined cost management. I am proud of what our teams have accomplished and their continued commitment to serving our customers,” said Paul McAndrew, President and Chief Executive Officer of Mueller Water Products.

Company Overview

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.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Mueller Water Products grew its sales at a mediocre 6.5% compounded annual growth rate. This wasn’t a great result compared to the rest of the industrials sector, but there are still things to like about Mueller Water Products.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Mueller Water Products’s annualized revenue growth of 8% over the last two years is above its five-year trend, suggesting some bright spots.

This quarter, Mueller Water Products reported modest year-on-year revenue growth of 4.1% but beat Wall Street’s estimates by 1.2%.

Looking ahead, sell-side analysts expect revenue to grow 3.2% over the next 12 months, a deceleration versus the last two years. This projection doesn’t excite us and indicates its products and services will see some demand headwinds. At least the company is tracking well in other measures of financial health.

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Operating Margin

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

Mueller Water Products has been an efficient company over the last five years. It was one of the more profitable businesses in the industrials sector, boasting an average operating margin of 13.9%. This result isn’t too surprising as its gross margin gives it a favorable starting point.

Analyzing the trend in its profitability, Mueller Water Products’s operating margin rose by 8.9 percentage points over the last five years, as its sales growth gave it operating leverage.

This quarter, Mueller Water Products generated an operating margin profit margin of 20.4%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions.

Mueller Water Products’s EPS grew at 21.2% compounded annual growth rate over the last five years, higher than its 6.5% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into the nuances of Mueller Water Products’s earnings can give us a better understanding of its performance. As we mentioned earlier, Mueller Water Products’s operating margin was flat this quarter but expanded by 8.9 percentage points over the last five years. On top of that, its share count shrank by 1.3%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Mueller Water Products, its two-year annual EPS growth of 29.2% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q2, Mueller Water Products reported adjusted EPS of $0.50, up from $0.34 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Mueller Water Products’s full-year EPS to shrink by 1.9% from $1.57 to $1.54.

Key Takeaways from Mueller Water Products’s Q2 Results

It was good to see Mueller Water Products beat analysts’ EPS expectations this quarter. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. On the other hand, its full-year revenue guidance slightly missed. Overall, we think this was a mixed quarter. Investors were likely hoping for more, and shares traded down 1.3% to $26.05 immediately following the results.

So should you invest in Mueller Water Products right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).