Analyzing Itron (ITRI) Gains 31% YTD: Will the Uptrend Last?
Itron ITRI is witnessing solid momentum, with shares having increased 31% year to date compared with 6.3% and 16.1% growth of the sub-industry and S&P Composite, respectively.
Headquartered in Liberty Lake, WA, Itron is one of the leading global suppliers of a wide range of standard, advanced and smart meters, and meter communication systems. It also provides networks and communication modules, software, services and sensors for effective management of electricity, gas and water resources for consumers.
Catalysts Driving Growth
The rise in share price can be attributed to strong second-quarter 2023 results. Itron reported non-GAAP earnings of 65 cents per share, surpassing the Zacks Consensus Estimate by 109.7%. The company reported earnings of 7 cents in the prior-year quarter.
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Revenues were $541.1 million, which beat the Zacks Consensus Estimate by 4.5%. The top line improved 25% year over year.
Itron's second quarter performance gained from higher software license sales, driven by Distributed Intelligence (DI) offerings. Easing of supply-chain issues and strong operational execution were other tailwinds.
The Device Solutions segment gained from increasing demand for Itron’s solutions in the fast-growing Water vertical. Rising demand for electric vehicles and distributed energy resource management are expected to drive customer bookings. Management expects bookings to be $2 billion for the current year.
ITRI recently announced expansion of its DI platform by launching the Edge Gateway product line. This new product line will help utilities to achieve decarbonization and sustainability goals, manage critical infrastructure and support the growing adoption of distributed energy resources.
Itron’s extensive restructuring efforts to cut down on overhead expenses and streamline its supply chain and manufacturing operations augur well. Strategic collaboration and frequent product launches are added positives.
Driven by strong results, the company made upward revision in its guidance for 2023. Management now projects revenues to be between $2.11 billion and $2.14 billion (prior view: $1.85-$1.95 billion). Non-GAAP earnings per share are estimated in the $2.03-$2.28 band (earlier view: 70 cents-$1.10 per share).
However, rising operating expenses coupled with leveraged balance sheet remain major headwinds. Uncertainty prevailing over global macroeconomic conditions and volatile supply-chain dynamics continue to be concerns for this Zacks Rank #3 (Hold) stock.
A Look at Estimates
Itron’s revenues are expected to increase 18.4% and 5.3% on a year-over-year basis in 2023 and 2024, respectively.
The bottom line is anticipated to rise 70.8% and 32% on a year-over-year basis in 2023 and 2024, respectively. The Zacks Consensus Estimate for 2023 and 2024 earnings per share is pegged at $1.93 and $2.55, up 31.3% and 5.8%, respectively, in the past 60 days.
ITRI has delivered an earnings surprise of 266.3%, on average, in the trailing four quarters.
Key Picks
Some better-ranked stocks worth consideration in the broader technology space are Badger Meter BMI, Salesforce CRM and Pegasystems PEGA. Each stock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The Zacks Consensus Estimate for Badger Meter’s 2023 earnings has risen 6.3% in the past 60 days to $2.86 per share. BMI’s earnings beat estimates in the last four quarters, the average surprise being 6.7%. Shares of BMI have surged 58% in the past year.
The Zacks Consensus Estimate for Salesforce’s fiscal 2024 earnings is pegged at $7.44 per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 19.3%.
CRM’s earnings surpassed estimates in the last four quarters, the average beat being 15.5%. Shares of CRM have grown 10.9% in the past year.
The Zacks Consensus Estimate for Pegasystems’ 2023 earnings has improved 6.6% in the past 60 days to $1.46 per share. PEGA’s earnings has an average surprise of 166.2% in the trailing four quarters. Shares of PEGA have jumped 16.8% in the past year.
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