Itron (ITRI) Appears Primed for Uptrend With 44.1% YTD Gain
Itron ITRI is witnessing robust momentum, with shares having surged 44.1% year to date against the 7.4% growth of the sub-industry. S&P Composite has improved 23.4% over the same period.
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 the effective management of electricity, gas and water resources for consumers.
With healthy fundamentals and strong growth opportunities, this Zacks Rank #2 (Buy) stock appears to be a solid investment option at the moment.
Apart from a favorable rank, ITRI has a VGM Score of A. 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.
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ITRI has delivered an earnings surprise of 289.3%, on average, in each of the trailing four quarters.
Itron’s revenues are suggested to improve year over year by 20.7% and 5.8% in 2023 and 2024, respectively.
The bottom line is anticipated to rise 154.9% and 7.5% 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 $2.88 and $3.09, up 31.5% and 10.8%, respectively, in the past 60 days.
ITRI’s long-term earnings growth rate is pegged at 23%.
Catalysts Driving Growth
ITRI’s top-line performance is being driven by robust operational execution, resulting in increased shipments to customers amid improving supply-chain issues. The Device Solutions segment is being driven by increasing demand for Itron’s solutions in the fast-growing Water vertical. The Outcomes segment is benefiting from higher recurring services revenues.
Driven by strong third-quarter results, the company made upward revisions to its 2023 guidance. It now projects revenues to be between $2.16 billion and $2.17 billion. Non-GAAP earnings per share are estimated in the band of $2.83-$2.93.
Earlier, ITRI predicted revenues in the range of $2.11-$2.14 billion. Non-GAAP earnings per share were envisioned to be between $2.03 and $2.28.
Continued momentum in software license sales driven by Distributed Intelligence offerings also bodes well. It expects increased demand for electric vehicles and distributed energy resource management to drive customer bookings in the future. By the end of third-quarter 2023, the company’s bookings were $413 million and its backlog amounted to $4.3 billion. Management expects bookings to be $2 billion for the current year.
Accelerating trends in electrification, gas safety, energy transition, grid-edge digitalization and water efficiency are likely to drive demand for the company’s solutions going forward. Management noted that utilities across the Asia-Pacific region are working on improving grid stability and reliability. This represents a solid opportunity for Itron.
ITRI’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.
A Few Headwinds
Rising operating expenses coupled with a leveraged balance sheet remain major headwinds. Uncertainty prevailing over global macroeconomic conditions, as well as volatile supply-chain dynamics, remain concerning.
Other Key Picks
Some other top-ranked stocks worth consideration in the broader technology space are Blackbaud BLKB, BlackBerry BB and Woodward WWD, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Blackbaud’s 2023 EPS improved 1.8% in the past 60 days to $3.86. BLKB’s long-term earnings growth rate is 23.4%.
Blackbaud’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 10.6%. Shares of BLKB have surged 53% in the past year.
The Zacks Consensus for BlackBerry’s fiscal 2024 EPS has remained unchanged in the past 30 days at 4 cents. BB’s earnings outpaced the Zacks Consensus Estimate in three of the last four quarters while missing in the remaining quarter. The average surprise stands at 55%. Shares of BB have gained 6.3% in the past year.
The Zacks Consensus Estimate for Woodward’s fiscal 2024 EPS has improved 7% in the past 60 days to $4.92.
WWD’s earnings outpaced the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 14.7%. Shares of WWD have jumped 49.6% in the past year.
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