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Mueller Water Products, Inc. (MWA) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Mueller Water Products, Inc. (MWA)

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Intrinsic Value (DCF)

Current$26.36
→
Intrinsic$34.64
+31%
$23.27$34.64$56.24
Market implies 13% growth for 5 years
DCF analysis suggests MWA could have 31% upside at 20% growth — verify assumptions match your view.
At $26, the market prices in 13% annual cash flow growth — a moderate expectation aligned with historical trends (20%).
Range: Bear $23 → Bull $56. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →16%18%20%22%
8%$42$46$50$54
10%$30$32$35$37
12%$22$24$26$28
14%$18$19$21$22

Bull Case

  • Bull case ($56) offers 113% upside at 24% growth, 9% discount
  • 24% margin of safety vs. base case estimate
  • Market-implied growth (13%) ≤ historical CAGR (20%)

Bear Case

  • Bear case ($23) implies 12% downside at 16% growth, 12% discount
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5-Year Free Cash Flow Projection

Year 1$229.68M
Year 2$275.62M
Year 3$330.74M
Year 4$396.89M
Year 5$476.26M
Terminal$7.01B

📐 Model Inputs

Growth Rate20.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$191.40MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is MWA stock undervalued or overvalued?
🟢 UNDERVALUED

MWA trades at $26.36 vs. our DCF-derived intrinsic value of $34.64, implying +40% upside. At a 10.0% WACC and 20.0% projected FCF growth, the market appears to be underpricing the present value of MWA's future cash flows. The bear case ($22.36) still suggests upside, providing margin of safety.

What is MWA's intrinsic value?

Using a 5-year DCF model: Base FCF of $191M, projected at 20.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $168M net debt and dividing by 0.16B shares: Bear $22.36 | Base $34.64 | Bull $52.74. Current price $26.36 implies +40% to base case.

How is MWA's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 20.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($5.60B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.