Aug. 27 at 2:09 PM
$MLI: Great Business, Unsustainable Margins?
MLI has quietly crushed it: zero debt,
$1B cash, steady buybacks, and a 500%+ stock run over the last decade. Not bad for a “boring” copper tube maker.
But the recent 28% gross margins? I don’t see them lasting. FIFO accounting + soaring copper prices made margins look fatter than they really are. History says mid-teens is the norm, and my base case assumes they settle closer to 23–24%, not 28%.
That makes a big difference in valuation. I get fair value around
$109/share (~16% upside). Solid company, but not screamingly cheap. At
$90+, the easy money feels made.
Management deserves credit for buybacks, dividends, and smart M&A. But copper cycles and housing demand risk remain real.
I like the business, just not the price. If it dips to the
$60S, I’ll take another look.
Full deep dive: https://www.beatingthetide.com/p/mueller-industries-mli-deep-dive-stock-analysis-beating-the-tide
