There’s a driving rain pelting my windows. The steady flow of water creates the perfect setting for me to consider earnings results from a leading water-equipment manufacturer.
After watching shares sink to a low earlier this year, investors are undoubtedly eager to see profits flowing from Mueller Water Products
While the company didn't exactly hit one out of the water park, this quarter was good for a near 10% pop in the shares, both the A and B classes. What really gave this Fool pause, however, was the decidedly cautious outlook issued with the release. Management "remain[s] cautious about the near-term economic environment given the increasing cost of raw materials and weak residential construction market."
If Fools are to interpret management’s outlook statement for the short term to mean that Mueller requires strength from residential construction to mount a recovery, then investors might be drinking stagnant water from Mueller's pipes -- homebuilders like Pulte Homes
Bolstering the long-run case for this key water infrastructure supplier, though, is the need to upgrade the United States’ own infrastructure. The EPA anticipates a "wave of infrastructure rehabilitation and replacement." (Wave! Get it?)
If major infrastructure investments in the U.S. are indeed inevitable to keep the water flowing regardless of the economic climate, then the battered shares of Mueller Water could present a long-term value. Such a megatrend could also benefit competitor Tyco International
Fool contributor Christopher Barker captains yachts and writes about stocks. He can also be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He owns shares of Aqua America. The Motley Fool has a disclosure policy.