Please ensure Javascript is enabled for purposes of website accessibility

Why Mueller Water Products Stock Dropped 11% Today

By Rich Smith – Updated May 7, 2019 at 5:18PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The infrastructure products company springs a leak: Earnings grow by one penny, but Wall Street wanted more.

What happened

Shares of infrastructure play Mueller Water Products (MWA 2.58%) closed down 11.4% on Tuesday after reporting weak profits and even weaker sales in Monday evening's Q2 2019 earnings report.

Expected to report pro forma profits of $0.14 per share on sales of $252 million, Mueller said it actually earned just $0.12 per share on $234 million in sales.

And then it dropped its guidance to boot.

Leaking pipe

Image source: Getty Images.

So what

And that was the good news. The bad news is that Mueller's GAAP earnings actually came out to only $0.07 per share (albeit up a penny from the $0.06 earned in last year's Q2). Sales rose only a small fraction of 1%, versus the 8% gain that Wall Street had been counting on, a fact that Mueller blamed partly on slower than anticipated residential construction and severe weather.

Now what

Mueller hopes to do better later in the year, citing expected "growth in all end markets during the second half of 2019, with municipal spending growth in the mid-single-digit range, residential construction growth in the low-single-digit range, and natural gas distribution growth in the mid-single-digit range."

That being said, management sliced about 1 percentage point of growth off its previous guidance, and says it expects sales to grow only between 7% and 9% this year, versus 2018 levels. Adjusted EBITDA is expected to grow from 12% to 15% relative to last year, but Mueller did not give any guidance for GAAP earnings.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.