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Badger Meter (BMI) Soars 46% YTD: Will the Uptrend Continue?

Badger Meter, Inc BMI is witnessing strong momentum, with shares having gained 46.1% year to date compared with the sub-industry’s growth of 22.2%. The company currently carries a Zacks Rank #2 (Buy).

Apart from a favorable rank, BMI has a Growth Score of B. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 (Strong Buy) or #2 and a VGM Score of A or B offer solid investment opportunities.

The company provides flow measurement, control and communications solutions, serving water and gas utilities, municipalities and industrial customers worldwide.

The company offers BEACON advanced metering analytics, a secure cloud-hosted software suite that allows consumer engagement tools to permit end-water customers to view and manage their water usage activity.

Zacks Investment Research
Zacks Investment Research

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Factors Behind the Surge

Badger Meter’s top-line performance is gaining from robust demand across business segments and the increased adoption of its differentiated smart water solution. Continued strength in E-Series, ultrasonic meters, cellular AMI solution, ORION Cellular endpoint sales and higher BEACON Software-as-a-Service revenues acted as major tailwinds.

In the last reported quarter, the company’s earnings per share (EPS) came in at 76 cents, beating the Zacks Consensus Estimate by 13.4%. Also, the bottom line compared favorably with the year-ago quarter’s EPS of 57 cents. Quarterly net sales increased to $175.9 million from $137.8 million in the year-ago quarter. The 28% rise was primarily driven by robust demand for smart water solutions and improving operating environment. Also, the top line beat the consensus mark by 10.8%.

A strong cash position with no long-term debt and ongoing price realization bodes well. Synergies from the acquisition are likely to drive the company’s top and bottom lines in the future. In January 2023, BMI acquired a U.K.-based intelligent water monitoring solutions company, Syrinix, for £15 million in an all-cash deal.

Going ahead, the company is likely to benefit from increasing customer backlogs and improving operating environment. Also, its margins are benefiting from value-based pricing and stabilization of inflationary pressures, improving supply chain dynamics and structural sales mix trends.

In August 2023, Badger Meter announced a 20% hike in its dividend. The new quarterly dividend stands at 27 cents.

A Look at Estimates

Badger Meter’s EPS is expected to increase 26.6% and 8.4% on a year-over-year basis to $2.86 and $3.10 in 2023 and 2024, respectively.  

The Zacks Consensus Estimate for 2023 and 2024 earnings has increased 5.1% and 5%, respectively, in the past 60 days, reflecting analysts’ optimism.

The company’s revenues for 2023 are projected to rise 19.9% to $678.1 million. For 2024, revenues are anticipated to improve 5.8% to $717.4 million.

Other Stocks to Consider

Some better-ranked stocks worth consideration in the broader technology space are VMware VMW, Synopsys SNPS and Adobe ADBE. Synopsys sports a Zacks Rank #1 while VMware and Adobe carry a Zacks Rank #2 each. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for VMware’s fiscal 2024 EPS has increased 5.9% in the past 60 days to $7.23. VMW’s earnings beat estimates in all the last four quarters, the average surprise being 1.2%. Shares of VMW have surged 49.6% in the past year.

The Zacks Consensus Estimate for Synopsys’ fiscal 2023 EPS is pegged at $11.09, up 2.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 16.4%.

SNPS’ earnings surpassed estimates in all the last four quarters, the average beat being 4.2%. Shares of SNPS have rallied 48.6% in the past year.

The Zacks Consensus Estimate for Adobe’s fiscal 2023 EPS has remained unchanged in the past 60 days at $15.70. ADBE’s earnings outshined estimates in all the last four quarters, the average surprise being 3.1%. Shares of ADBE have jumped 82.6% in the past year.

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Badger Meter, Inc. (BMI) : Free Stock Analysis Report

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Synopsys, Inc. (SNPS) : Free Stock Analysis Report

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