Badger Meter Inc. (BMI) has been trading above $40 per share since its strong third quarter report from mid October. Previously, it had been trading in the $30 range. It has delivered a year-to-date return of roughly 56%. This Zacks #1 Rank (Strong Buy) manufacturer of flow measurement and control products stands to benefit from customers' preference for the cost effective automatic meter reading (AAMRQ) technology.
Strong Earnings Beat in Q3
On October 16, Badger Meter reported third-quarter earnings of 62 cents per share, which was way ahead of the Zacks Consensus Estimate by nearly 32% and better than last year by 35%. The outperformance was driven by a robust increase in sales, improved profit margins and successful ongoing cost reduction activities.
Revenues surged 25% year over year to $87 million, outperforming the Zacks Consensus Estimate of $81 million. The increase was led by contribution from the Racine Federated acquisition (which the company acquired in January this year), along with increased sales of the company's municipal water products.
Badger Meter has a strong balance sheet and healthy cash flows, helping it to invest in growth opportunities, invest in developing new products and return cash to shareholders. Even after its largest ever acquisition of Racine Federated earlier this year, Badger Meter has no long term debt on its balance sheet with an impressive total debt to capitalization ratio of 30%.
The company completed a $30 million stock buyback program in the quarter and also hiked its quarterly dividend by 6.25% to 17 cents per share. This marked the 20th consecutive year with a dividend increase.
Earnings Estimates Advancing
The Zacks Consensus Estimate for 2012 is up 14% over the last 60 days to $2.00 per share, representing a projected year over year growth of around 49%. For 2013, the Zacks Consensus Estimate again rose by 14% to $2.25 per share, representing an estimated year over year growth of around 13%.
Sound Technicals and Healthy Performance
Technical indicators show that Badger Meter has been trading above its 50-day and 200-day moving averages since September 2012. Following a golden crossover in March 2012, the 50-day moving average is currently higher than the 200-day moving average, signaling a bullish trend.
On the performance front, Badger Meter has outperformed the S&P 500 over the past year and has delivered a year-to-date return of roughly 56%, much higher than the S&P 500's return of around 14%.
Incorporated in 1905, Badger Meter is a leading innovator, manufacturer and marketer of flow measurement and control products, catering to water and gas utilities, municipalities and industrial customers across the globe. Its product lines fall into two categories - water applications and specialty applications - and are used in a wide variety of applications, including water, oil and lubricants. The company, with market cap of roughly $645 million, employs around 1,220 people and manufactures its products in its facilities across the U.S., Germany, Mexico and Switzerland.
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