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Here's Why Investors Need to Keep an Eye on Badger Meter (BMI)

Badger Meter BMI is one stock investors may want to keep an eye on in the current volatile market conditions, given its upside potential. The company currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The company is benefiting from a robust demand environment and accelerated adoption of innovative digital water technologies, particularly ORION Cellular endpoints and the BEACON digital platform.

Badger Meter’s 2022 and 2023 earnings are expected to increase 10.6% and 12.6%, respectively, year over year. Revenues are anticipated to rise 9.7% and 4.9% in 2022 and 2023, respectively.

BMI has outpaced estimates in three of the trailing four quarters, delivering an earnings surprise of 12.6%, on average.

In the last reported quarter, Badger Meter delivered earnings of 57 cents per share, beating the Zacks Consensus Estimate of 53 cents. The bottom line compares favorably with the year-ago quarter’s earnings of 48 cents. Quarterly net sales increased to $137.8 million from $122.9 million in the year-ago quarter. The 12.2% rise was primarily due to record order rates, driven by robust customer demand, effective supply chain management and continued price realization, partly offset by inflationary cost pressure and supply-chain challenges.

For the third quarter, the Zacks Consensus Estimate for earnings is pegged at 60 cents, up 11.1% year over year. The consensus mark for revenues is pegged at $141.3 million, suggesting an increase of 9.7% year over year.

Amid the ongoing volatility, BMI stock has proved more resilient than the Zacks sub-industry. The stock has lost 5.5% in the past year against a 20% decline of the sub-industry.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

The stock is down 14.1% from its 52-week high level of $112.36 on Dec 08, 2021, making it relatively affordable for investors.

Strong Fundamentals

Headquartered in Milwaukee, WI, Badger Meter provides flow measurement, control and communications solutions, serving water and gas utilities, municipalities and industrial customers worldwide. The company’s products measure water, oil, chemicals and other fluids and are known for accuracy, long-lasting durability and for providing valuable and timely measurement data.

Badger Meter’s performance benefits from robust customer demand, effective supply chain management and continued price realization. Also, strength in ultrasonic meters, ORION Cellular endpoint sales, and higher BEACON Software-as-a-Service (SaaS) are major tailwinds.

With its ORION Cellular endpoints and communication and software technologies, Badger Meter is focused on creating robust digital solutions to operationalize real-time data into actionable insights. Its BEACON software-as-a-service offering facilitates collecting and analyzing data within the distribution network to improve operational awareness.

However, inflationary pressure and production volatility caused by global supply chain disruptions is likely to affect quarterly margins.

Stocks to Consider

Some better-ranked stocks from the broader technology space are Cadence Design Systems CDNS, Keysight Technologies KEYS and Arista Networks ANET. All stocks sport a Zacks Rank #1 (Strong Buy).

The Zacks Consensus Estimate for CDNS 2022 earnings is pegged at $4.11 per share, rising 5.7% in the past 60 days. The long-term earnings growth rate is anticipated to be 17.7%.

Cadence’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 9.8%. Shares of CDNS are up 3% in the past year.
The Zacks Consensus Estimate for Keysight’s fiscal 2022 earnings is pegged at $7.47 per share, up 4.3% in the past 60 days. The long-term earnings growth rate is anticipated to be 11%.

Keysight’s earnings beat the Zacks Consensus Estimate in three of the preceding four quarters, with the average being 9.3%. Shares of KEYS have lost 4% of their value in the past year.

The Zacks Consensus Estimate for Arista Network’s 2022 earnings is pegged at $4.04 per share, increasing 9.8% in the past 60 days. The long-term earnings growth rate is anticipated to be 18.6%.

Arista Network’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 10.1%. Shares of ANET have increased 40% in the past year.


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Badger Meter, Inc. (BMI) : Free Stock Analysis Report
 
Cadence Design Systems, Inc. (CDNS) : Free Stock Analysis Report
 
Arista Networks, Inc. (ANET) : Free Stock Analysis Report
 
Keysight Technologies Inc. (KEYS) : Free Stock Analysis Report
 
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