All things STOCKS

#15,101
#15,101
Thunder Good-Oil said:
Mueller (MLI) posted a lower bottom line versus a year ago and fell 10%. Great company and a great stock. Buying opportunity for a single digit p/e stock.

There are going to be a lot of stocks taking hits as they post earnings with difficult comparisons versus Q2-2022.
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Wonder how much of their bottom line miss was due to their Covington plant being heavily damaged in the tornado...
 
#15,102
#15,102
BigOrangeMojo said:
Wonder how much of their bottom line miss was due to their Covington plant being heavily damaged in the tornado...
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That was an event that contributed to a lower bottom line, but wasn’t an unknown. Apparently their own forecasters missed the projections and they were hammered over the bad guidance.

I’ll be trying to buy tomorrow. The current ASK is the same as the close. The current BID is almost another 9% drop - doubt that it opens that far down though. They shouldn’t be as challenged competing with China going forward. But I’d guess that China might have also been a big supplier for them. Overall I think they’ll do well as the Inflation Reduction Act stimulus money is put into the economy. 6.93x P/E ratios for well run companies aren’t common.

Mueller Industries, Inc. Reports Second Quarter 2023 Earnings
 
#15,103
#15,103
Thunder Good-Oil said:
That was an event that contributed to a lower bottom line, but wasn’t an unknown. Apparently their own forecasters missed the projections and they were hammered over the bad guidance.

I’ll be trying to buy tomorrow. The current ASK is the same as the close. The current BID is almost another 9% drop - doubt that it opens that far down though. They shouldn’t be as challenged competing with China going forward. But I’d guess that China might have also been a big supplier for them. Overall I think they’ll do well as the Inflation Reduction Act stimulus money is put into the economy. 6.93x P/E ratios for well run companies aren’t common.

Mueller Industries, Inc. Reports Second Quarter 2023 Earnings
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They called out the tornado (and a fire) did impact operating margins and maybe they understated the operational impact of it during last earnings release. (My Mom lives at the end of Muellar Brass road so using the word "damaged" was an understatment and maybe the analysts didn't factor all of that in). Good people and managers though both there and at Corp HQ. It's an Investor Relations learning lesson for a company that grows from a 1-2B market cap company to 5+ billion market cap.

Like you said though, well run company with some decent tailwinds
 
#15,105
#15,105
BigOrangeMojo said:
They called out the tornado (and a fire) did impact operating margins and maybe they understated the operational impact of it during last earnings release. (My Mom lives at the end of Muellar Brass road so using the word "damaged" was an understatment and maybe the analysts didn't factor all of that in). Good people and managers though both there and at Corp HQ. It's an Investor Relations learning lesson for a company that grows from a 1-2B market cap company to 5+ billion market cap.

Like you said though, well run company with some decent tailwinds
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They’re world wide and the tornado was at the end of Q1 start of Q2. Either the Wall Street analysts blew it or the company guidance was bad. Either way, I will load up on some shares tomorrow unless it rebounds bigly at the open. They should do great unless there is a severe recession.

If MLI has had to compete with China then that headwind is being diminished. But if China was providing a lot of added value inputs into their supply chain then it is the opposite. I don’t know if Mueller generally starts with raw materials or instead partially manufacturer items. I wonder if they usually start with copper ore or with copper tubing. Or with ground up recycled plastic pellets or plastic tubing. Maybe all of the above.
 
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#15,106
#15,106
Thunder Good-Oil said:
They’re world wide and the tornado was at the end of Q1 start of Q2. Either the Wall Street analysts blew it or the company guidance was bad. Either way, I will load up on some shares tomorrow unless it rebounds bigly at the open. They should do great unless there is a severe recession.

If MLI has had to compete with China then that headwind is being diminished. But if China was providing a lot of added value inputs into their supply chain then it is the opposite. I don’t know if Mueller generally starts with raw materials or instead partially manufacturer items. I wonder if they usually start with copper ore or with copper tubing. Or with ground up recycled plastic pellets or plastic tubing. Maybe all of the above.
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They don't give guidance to my knowledge so this is an analyst miss. I know it's global but temporarily and unexpectedly losing one of your largest manufacturing plants (in your primary pipe business) can provide short term stock price blips, especially without guidance or heavy analyst coverage. Their stock dropped 7-8% back in early April for this reason until they issued a press release. They had been on a roll ever since....

If anything, this just strengthens the long term bull case because any operating expense headwinds should be non recurring...
 
#15,107
#15,107
BigOrangeMojo said:
They don't give guidance to my knowledge so this is an analyst miss. I know it's global but temporarily and unexpectedly losing one of your largest manufacturing plants (in your primary pipe business) can provide short term stock price blips, especially without guidance or heavy analyst coverage. Their stock dropped 7-8% back in early April for this reason until they issued a press release. They had been on a roll ever since....

If anything, this just strengthens the long term bull case because any operating expense headwinds should be non recurring...
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I’d be concerned that shares have appreciated too much and that there is considerable downside risk. But that tiny earnings multiple indicates that much of the risk is already priced in.

60 million shares. 400,000-500,000 traded daily. 95% institutional ownership. 3 buy ratings, 3 neutral ratings. Very little options interest. Only monthly contracts and not much open interest at all. I like to sell ATM puts instead of buying shares directly, so I might struggle to find an entry point. The IV is only about 30% - there’s very little premium on the lower strike puts. Not really worth tying up capital on cash reserves puts for months out.

They beat a lot on earnings but missed revenues by more than 10% - therefore the reason for the drop in share price.

ASK is now $88, but BID is still $75 ($82.72 close).

The dividend is average but the coverage ratio is exceptional. I haven’t checked debt levels. Being a 100+ year old company I wouldn’t expect that they ever take on much risk with leverage.

The price to revenue is barely greater than 1x.

Boring, sound company. I’m surprised that Buffett hasn’t bought them by now. Maybe there’s zero interest, but with 95% institutional ownership you’d think it isn’t up to management to decide.
 
#15,110
#15,110
The Fed should be actually tightening (reducing the amount of money in the universe) constantly for 6 or 7 years. See graph here:

1690382162956.png

that is a different thing from interest rates, which I assume will:
1. not go much higher (if at all after today)
2. Someday come down a bit.
That is a cornerstone assumption for me. I have lots of bond rate risk now, willingly and enthusastically.

In other news, I had to laugh today at some reporting. I guess they can't help it. TLRY (a pot stock) didn't lose any money, vs. a prediction of a 4 cent loss. Since they failed to lose 100% of the money, this is considered a 100% earning surprise. I thought that was comical.

I had a chance to get out of it unscathed, but I didn't. It sucks. I'm doing the whole "burn this sucker down" thing holding on to it until such time that I can escape without loss. I know, sunk cost is for idiots, but I just can't help it.
 
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#15,111
#15,111
Firebirdparts said:
The Fed should be actually tightening (reducing the amount of money in the universe) constantly for 6 or 7 years. See graph here:

View attachment 565639

that is a different thing from interest rates, which I assume will:
1. not go much higher if at all
2. Someday come down a bit.
That is a cornerstone assumption for me. I have lots of bond rate risk now, willingly and enthusastically.

In other news, I had to laugh today at some reporting. I guess they can't help it. TLRY (a pot stock) didn't lose any money, vs. a prediction of a 4 cent loss. Since they failed to lose 100% of the money, this is considered a 100% earning surprise. I thought that was comical.

I had a chance to get out of it unscathed, but I didn't. It sucks. I'm doing the whole "burn this sucker down" thing holding on to it until such time that I can escape without loss. I know, sunk cost is for idiots, but I just can't help it.
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If you can hold, there will be better days in 6-8 weeks
 
#15,113
#15,113
Velo Vol said:
Inflation has not be slain.
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Market is looking ahead and anticipating that it will be.

The Fed is always behind, and honestly the risk at this point is that they go too much, IMO. They were way too slow to get started and had to have multiple 50 bp hikes along the way to catch up, and likely will keep going for too long because they're looking backward.
 
#15,114
#15,114
05_never_again said:
Market is looking ahead and anticipating that it will be.

The Fed is always behind, and honestly the risk at this point is that they go too much, IMO. They were way too slow to get started and had to have multiple 50 bp hikes along the way to catch up, and likely will keep going for too long because they're looking backward.
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Powell still sounds kind of hawkish.
 
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#15,118
#15,118
05_never_again said:
He thinks he needs to because he was Mr. Transitory for so long. Again...the Fed is almost always behind the curve.
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Probably true. But how many times must he say 2% inflation before we get the point? Stock market is up, housing is up, oil creeping up. I know the y/y cpi comps are favorable for the next few months, but what if these trends continue?
 
#15,119
#15,119
Powell tells one questioner, "that's not the appropriate way to think about it." It was a poorly worded question.
I don't know how he gives such detailed answers for such a long time.
 
#15,120
#15,120
Velo Vol said:
Probably true. But how many times must he say 2% inflation before we get the point? Stock market is up, housing is up, oil creeping up. I know the y/y cpi comps are favorable for the next few months, but what if these trends continue?
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What would you like to see him do? Raise rates faster?
Not sure his actions have much to do with the price of oil or stocks. I expected to see more of an effect on home buyers as mortgage rates have risen. OTOH we bought our first home when rates were 18%. I suspect some people are buying with the hope of rates falling, and refinancing. Or beating the continued rise in rates.
 
#15,121
#15,121
Velo Vol said:
Probably true. But how many times must he say 2% inflation before we get the point? Stock market is up, housing is up, oil creeping up. I know the y/y cpi comps are favorable for the next few months, but what if these trends continue?
Click to expand...
Those FOMC statements are always full of those types of repetitions. If he removed it at this point, it would just create uncertainty.
 
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