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Badger Meter (BMI) to Grow on Rising Demand & Tax Reform

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On Mar 26, we issued an updated research report on Badger Meter, Inc. BMI. This provider of control and communications solutions, and flow measurement is expected to gain from the rising demand of E-Series meters, the focus on acquisition and impact of the U.S. tax reform. Termination of its pension-benefit plan is also anticipated to drive growth.

Let’s illustrate these growth factors in detail.

Growing Demand for E-Series Meters

Badger Meter is poised to gain from the growing demand of E-Series meters and ORION cellular endpoints as well as BEACON Advanced Metering Analytics (AMA) managed solution in near future. The company will also benefit from the integration of technology of D-Flow into E-series meters. Further, the introduction of the next version of E-series meters in the second half of 2018 will drive Badger Meter’s growth through product improvement and cost reduction.

Impact of Termination of Pension-Benefit Plan

Badger Meter announced its intention to terminate its frozen pension-benefit plan. After reviewing the administrative and monetary costs of maintaining this plan, it was determined that the termination of the plan will enable the company to control costs of overall retirement programs. It expects that the termination will occur in the second or third quarter of 2018, depending on regulatory approvals.

Acquisitions to Propel Growth

During second-quarter 2017, Badger Meter acquired D-Flow Technology. The acquisition will enhance its successful E-Series Ultrasonic product line, lower production costs and provide a platform for the advancement of ultrasonic capabilities. Further acquisitions will drive the company’s growth. Badger Meter also bought the assets of Carolina Meter & Supply in November 2017. The buyout will help the company boost sales while providing technical and operational support to the customers.

Badger Meter to Gain from Tax Reform

Badger Meter expects that the tax reform will be highly beneficial over the long term. It also believes that the tax law will have a positive impact on the bottom line in 2018. It anticipates that the effective tax rate will drop to 24% in 2018, from the normal range of 35-36%.

Share Price Performance

The company has outperformed the industry over the past year. Its shares rallied 29.3% while the industry recorded a gain of 13.7%.


Zacks Rank & Other Stocks to Consider

Badger Meter carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the same sector are Allied Motion Technologies, Inc. AMOT, Transcat, Inc. TRNS and Akamai Technologies, Inc. AKAM. Each of the stocks carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Allied Motion Technologies has a long-term earnings growth rate of 16%. Its shares rallied 90% over the past year.

Transcat has a long-term earnings growth rate of 8%. Its shares increased 20% over the past year.

Akamai Technologies has a long-term earnings growth rate of 12.8%. The stock gained 14% in a year’s time.

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