What happened

Mueller Water Products (MWA 2.18%) ended its fiscal 2021 with a whimper, and investors were not pleased. The company's shares were down 12% at midday on Tuesday after its fiscal fourth-quarter results failed to meet expectations.

So what

Mueller, which makes products used in the transmission, distribution, and measurement of water, earned $0.12 per share in the period, which ended Sept. 30, on revenue of $295.6 million. The revenue figure came in about where analysts had expected, but earnings were well short of the $0.19 per share consensus estimate.

A water treatment plant.

Image source: Getty Images.

CEO Scott Hall called the results "a disappointing end to a strong year," noting that the company faced obstacles including "significant raw material and other cost inflation, supply chain disruptions, and labor availability challenges."

The results led to at least one analyst downgrade. On Tuesday morning, Boenning & Scattergood analyst Ryan Connors cut Mueller to neutral from outperform, calling its underperformance "somewhat disconcerting" given that rivals are thriving due to strong demand. Connors noted that Mueller Water has stumbled in the past, and said the stock will likely be more of a "show-me" story heading into 2022.

Now what

Management struck an upbeat tone about the future, forecasting a 4% to 8% net sales increase in its fiscal 2022 based on its current backlog, strong pricing power, and new product initiatives. Mueller believes it can grow adjusted EBITDA at a similar rate, despite expected headwinds including continued inflation, a challenging labor market, and supply chain disruptions.

There's potential here, but as Connors noted, Mueller has given investors reason to question whether it will be able to capitalize on strong demand during a period when infrastructure renewal is in focus.