REV Group (NYSE:REVG) vs. Mueller Water Products (NYSE:MWA) Critical Analysis

Mueller Water Products (NYSE:MWA) and REV Group (NYSE:REVG) are both mid-cap industrials companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, analyst recommendations, valuation, institutional ownership, dividends, profitability and risk.

Insider and Institutional Ownership

91.7% of Mueller Water Products shares are owned by institutional investors. 1.1% of Mueller Water Products shares are owned by company insiders. Comparatively, 1.7% of REV Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Mueller Water Products and REV Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Mueller Water Products	15.02%	23.55%	13.12%
REV Group	3.86%	31.67%	10.30%

Dividends

Mueller Water Products pays an annual dividend of $0.28 per share and has a dividend yield of 1.3%. REV Group pays an annual dividend of $0.24 per share and has a dividend yield of 0.4%. Mueller Water Products pays out 19.9% of its earnings in the form of a dividend. REV Group pays out 12.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Mueller Water Products has raised its dividend for 10 consecutive years and REV Group has raised its dividend for 1 consecutive years. Mueller Water Products is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent ratings for Mueller Water Products and REV Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mueller Water Products	2	1	2	0	2.00
REV Group	0	2	1	1	2.75

Mueller Water Products presently has a consensus target price of $27.40, indicating a potential upside of 24.32%. REV Group has a consensus target price of $55.67, indicating a potential downside of 12.88%. Given Mueller Water Products’ higher possible upside, research analysts plainly believe Mueller Water Products is more favorable than REV Group.

Risk and Volatility

Mueller Water Products has a beta of 1.01, meaning that its stock price is 1% more volatile than the S&P 500. Comparatively, REV Group has a beta of 1.14, meaning that its stock price is 14% more volatile than the S&P 500.

Earnings & Valuation

This table compares Mueller Water Products and REV Group”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mueller Water Products	$1.43 billion	2.41	$191.70 million	$1.41	15.63
REV Group	$2.46 billion	1.27	$95.20 million	$1.91	33.46

Mueller Water Products has higher earnings, but lower revenue than REV Group. Mueller Water Products is trading at a lower price-to-earnings ratio than REV Group, indicating that it is currently the more affordable of the two stocks.

About Mueller Water Products

Mueller Water Products, Inc. manufactures and markets products and services for the transmission, distribution, and measurement of water used by municipalities, and the residential and non-residential construction industries in the United States, Israel, and internationally. It operates in two segments, Water Flow Solutions and Water Management Solutions. The Water Flow Solutions segment provides valves for water systems, such as iron gate, butterfly, tapping, check, knife, plug, and ball valves, which are used to control distribution and transmission of potable water and non-potable water, as well as in water transmission or distribution, water treatment facilities, or industrial applications. It also offers service brass products. The Water Management Solutions segment offers dry-barrel and wet-barrel fire hydrants for water infrastructure development; fire protection systems, and water infrastructure repair and replacement projects; pipe repair products, such as couplings, grips, and clamps used to repair leaks; residential, fire line, and commercial water metering products, systems, and services; water leak detection and pipe condition assessment products and services; machines and tools for tapping, drilling, extracting, installing, and stopping-off; gas valve products for use in gas distribution systems; and intelligent water solutions, including pressure control valves, advanced pressure management, network analytics, event management, and date logging. It sells its products under the Canada Valve, Centurion, Ez-Max, Hydro Gate, Hydro-Guard, HYMAX, HYMAX VERSA, Jones, Krausz, Milliken, Mueller, Pratt, Pratt Industrial, Repamax, Repaflex, Singer, Echologics, Echoshore, ePulse, Hersey, LeakFinderRT, LeakFinderST, LeakListener, LeakTuner, Mi.Echo, Mi.Net, Mueller Systems, Sentryx, and U.S. Pipe Valve and Hydrant brands. Mueller Water Products, Inc. was founded in 1857 and is headquartered in Atlanta, Georgia.

About REV Group

REV Group, Inc., together with its subsidiaries, designs, manufactures, and distributes specialty vehicles, and related aftermarket parts and services in the United States, Canada, and internationally. It operates through three segments: Fire & Emergency, Commercial, and Recreation. The Fire & Emergency segment provides fire apparatus equipment under the Emergency One, Kovatch Mobile Equipment, Ferrara, Spartan Emergency Response, Smeal, Spartan Fire Chassis, and Ladder Tower brand names; and ambulances under the American Emergency Vehicles, Horton Emergency Vehicles, Leader Emergency Vehicles, Road Rescue, and Wheeled Coach brand names. The Commercial segment offers transit buses, type A school buses, sweepers, and terminal trucks under the Collins Bus, Eldorado National (California), Magellan, Capacity, and LayMor brand names. The Recreation segment offers motorized and towable RV models under the American Coach, Fleetwood RV, Holiday Rambler, Renegade RV, Midwest Automotive Designs, and Lance Camper brands; and produces a range of custom molded fiberglass products. The company sells its products to municipalities, government agencies, private contractors, consumers, and industrial and commercial end users through its direct sales force or dealer network. The company was formerly known as Allied Specialty Vehicles, Inc. and changed its name to REV Group, Inc. in November 2015. REV Group, Inc. was incorporated in 2008 and is based in Brookfield, Wisconsin.