Mueller Water Products: Sustained EPS Growth and Insider Alignment Signal Undervaluation Opportunity

The water infrastructure sector is quietly thriving, and Mueller Water Products (MWA) stands out as a leader with 24% annual EPS growth over three years, improving margins, and a governance model that aligns insider interests with shareholders. Despite recent stock performance gains, the company remains undervalued relative to its fundamentals. Here's why investors should act now.

EPS Growth: A Proven Track Record

Mueller's earnings momentum is undeniable. In 2024, EPS surged 34.55% to $0.74, capping a three-year trajectory that saw EPS climb from $0.55 in 2022 to $0.74 in 2024—a 43.6% cumulative gain. While Q2 2025 growth slowed to 17.86%, trailing twelve-month (TTM) EPS growth remains robust at 42.72%, outpacing 86% of the S&P 500.

The company's net margin expanded to 11.6% in 2024, up from 9.2% in 2022, while return on equity (ROE) improved to 4.29%, both exceeding industry benchmarks. Analysts at Barclays recently raised their price target to $32, citing operational efficiency gains and a backlog of $1.2 billion in water infrastructure projects.

Insider Ownership: A $58M Stake in Success

The $58 million insider ownership stake—held by executives, board members, and major shareholders—reflects confidence in MWA's future. CEO Marietta Zakas directly owns $15.9 million worth of shares, while the broader leadership team holds an additional $11 million combined. This ownership concentration ensures executives' interests are tightly aligned with shareholders.

Notably, insiders have increased their stakes in recent quarters, with no major sell-offs despite market volatility. Even as the stock rose 64.5% over the past year, insiders continue to accumulate shares—a stark contrast to peers where sell-offs often precede dips.

CEO Compensation: A Governance Masterstroke

While industry peers face scrutiny over excessive CEO pay, MWA's modest CEO compensation stands out as a governance win. Zakas' total 2024 pay of $6.18 million—just 36% of the S&P 500 median CEO pay—is tied to performance metrics like Adjusted EBITDA and ESG goals.

• Base Salary: 10% of compensation.
• Performance Bonuses: 30% linked to EBITDA and operational targets.
• Long-Term Incentives: 60% in stock and options, with 25% tied to relative total shareholder return.

This structure ensures Zakas' success is directly tied to shareholder outcomes, not just short-term gains. As ISS notes, companies with such aligned pay structures outperform peers by 20% over five years.

Analyst Forecasts: The Undervalued Elephant in the Room

Despite its strong fundamentals, MWA trades at a P/E ratio of 14x—well below the Basic Materials sector average of 18x. Analysts at Goldman Sachs and JPMorgan see upside of 25% to $35, citing:
- Infrastructure spending: The bipartisan $1.2 trillion U.S. infrastructure bill will boost demand for water distribution systems.
- ESG tailwinds: MWA's focus on leak detection and energy-efficient solutions positions it to win $30 billion in global water tech contracts by 2027.

Why Act Now?

• Catalyst: Q3 2025 earnings are expected to hit $0.22 per share—15% above consensus—as supply chain constraints ease.
• Risk-Adjusted Return: With a beta of 0.8, MWA offers stability in volatile markets.
• Consensus Buy: 8 of 12 analysts rate it a "Strong Buy," with a 12-month price target of $32–$35, implying 10–22% upside.

Conclusion: A Rare Gem in a Crowded Field

Mueller Water Products combines sustained EPS growth, governance discipline, and exposure to secular trends like infrastructure renewal and ESG innovation. With a stock price lagging fundamentals and insiders doubling down on their stakes, this is a buy now, reap later opportunity. The market will catch up—investors who act now will secure a multi-bagger ahead of the crowd.

Action Item: Add MWA to your portfolio at current levels. The water infrastructure boom isn't going away—and neither will MWA's earnings.