When Badger Meter, Inc. (NYSE:BMI) released its most recent earnings update (30 June 2019), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Badger Meter has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I've summarized the key takeaways on how I see BMI has performed.
Were BMI's earnings stronger than its past performances and the industry?
BMI's trailing twelve-month earnings (from 30 June 2019) of US$36m has jumped 25% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 2.1%, indicating the rate at which BMI is growing has accelerated. What's enabled this growth? Let's see whether it is solely owing to an industry uplift, or if Badger Meter has seen some company-specific growth.
In terms of returns from investment, Badger Meter has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 9.1% exceeds the US Electronic industry of 6.8%, indicating Badger Meter has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Badger Meter’s debt level, has declined over the past 3 years from 20% to 14%.
What does this mean?
Though Badger Meter's past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Badger Meter to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for BMI’s future growth? Take a look at our free research report of analyst consensus for BMI’s outlook.
- Financial Health: Are BMI’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2019. This may not be consistent with full year annual report figures.
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