Mueller Industries, an industrial corporation listed on the NYSE as MLI, has shown high performance and strategic growth, especially since 2020. We bring you a detailed analysis based on various sources.
Strategic acquisitions and divestitures.
Mueller Industries is actively involved in mergers, acquisitions (M&A) and divestitures, which have contributed significantly to its growth. The company's recent activities include the acquisition of Kessler Sales & Distribution to expand its core business in the U.S., the acquisition of Hart & Cooley to expand its flexible pipe operations, the divestiture of four subsidiary businesses, an investment in a copper scrap beneficiation system in the U.K., and acquiring majority ownership of a copper tube joint venture in the Middle East. The Middle East business is particularly important as it includes the region's first and only copper tube plant, serving a market where EMEA sales account for 9% of Mueller Industries' sales.
Financial Performance
Mueller Industries has experienced exponential growth in earnings since 2020, growing from $274.1 million in 2020 to $899.2 million in TTM (twelve months later). The company has also experienced a 325.15% increase in earnings since 2018, with most of this growth occurring after 2020. This was accompanied by an impressive increase in EBITDA and EPS (earnings per share). In addition, the company's financial stability has improved, as evidenced by a decrease in its liability-to-asset ratio from 0.589 in 2018 to 0.216 TTM, lower than the industry average.
Stock performance and dividend yield.
Despite strong financials, Mueller Industries' stock price has not fully reflected its performance. The company has a Quant rating of 4.76, indicating a strong buy, and has paid dividends regularly since 2004. The annual dividend growth rate (TTM) is 79.59%, 815.31% higher than the industry average.
Grant
The company's valuation ratios indicate that it is undervalued compared to similar companies in the sector. TTM's P/E (price-to-earnings) ratio is 5.91, which is 70.21% lower than the industry average, and its enterprise value-to-EBITDA ratio is 3.78, which is also lower than the average.
Product Segments and Revenues
Mueller Industries operates in three segments. Piping Systems ($2.6 billion in 2021), Industrial Metals ($703 million) and Air Conditioning ($495 million). The company's primary business focus lies in copper tubing used in a variety of applications, including residential construction, refrigeration, heating and ventilation.
Recent quarterly results
For the third quarter of 2023, Mueller Industries reported operating income of $181.0 million, net income of $132.7 million, diluted earnings per share of $1.17 and net sales of $819.8 million. These figures represent a decrease from the same quarter in 2022, primarily due to lower demand in the wholesale channel, especially for products used in residential construction. However, the company maintains a strong cash position and a high current ratio of 6.0 to 1. Company CEO Greg Christopher highlighted strategic investments and capacity rationalization that should generate favorable cost improvements, and emphasized a focus on growth and portfolio expansion.
Overall, Mueller Industries exhibits good financial health, strategic growth through acquisitions and divestitures, and is undervalued relative to its industry peers. The company's commitment to strategic growth and financial stability, combined with its focus on copper tubing and industrial metals, positions it well for future success.
