MWA
Mueller Water Products, Inc.
$24.87
Platform & Compounding FCF
50%
Two-stage FCF DCF
Moderate
·
Conviction
Overvalued
Trading 19.9% above fair value
You pay
$24.87
Bear
$17.07
Fair
$20.73
Bull
$24.00
Bear
$17.07
-31.4%
4% stage 1 growth, 11% discount
Fair
$20.73
-16.6%
7% stage 1 growth, 11% discount
Bull
$24.00
-3.5%
9% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (7% base case)
Terminal Value % of EV
36%
Implied Market Multiple
23.9x
Market is pricing in (growth)
11.3%
vs 6.6% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $30.80 from 21 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $20.73 per share.
Warnings
Wall Street's average price target is $30.80 (from 21 analysts). Our estimate is 44% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions