Itron (ITRI) Gains 15.4% YTD: Will the Upward Trend Last?
Itron ITRI is witnessing solid momentum, with shares having gained 15.4% year to date against the 0.7% decline of the sub-industry. S&P Composite has improved 11.4% over the same period.
With healthy fundamentals and strong growth opportunities, this Zacks Rank #1 (Strong Buy) stock appears to be a solid investment option at the moment.
Apart from a favorable rank, ITRI has a VGM Score of B. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 or #2 (Buy) and a VGM Score of A or B offer solid investment opportunities.
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 effective management of electricity, gas and water resources for consumers.
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Catalysts Driving Growth
Itron's performance is gaining from higher software license sales driven by Distributed Intelligence (DI) offerings. It expects increased demand for electric vehicles and distributed energy resource management to drive customer bookings going ahead. By the end of second-quarter 2023, the company noted that it delivered 7.2 million DI capable endpoints, up 13% sequentially. It rose 140% since the end of 2020.
The number of licensed DI applications operating commercially jumped 24% sequentially to 9.2 million. Earlier, the company announced that it is expanding its DI platform by launching its latest Edge Gateway product line. This new product line will help utilities to achieve decarbonization and sustainability goals, manage critical infrastructure and support growing adoption of distributed energy resources. Management expects bookings to be $2 billion for the current year.
Easing supply-chain issues along with strong operational execution are other tailwinds. The Device Solutions segment is being driven by increasing demand for Itron’s solutions in the fast-growing Water vertical.
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.
Driven by strong second-quarter results, the company made upward revisions for its 2023 guidance. It now projects revenues to be between $2.11 billion and $2.14 billion. Non-GAAP earnings per share are estimated in the $2.03-$2.28 band.
Earlier, ITRI predicted revenues in the range of $1.85 billion and $1.95 billion. Non-GAAP earnings per share were envisioned to be between 70 cents and $1.10.
However, rising operating expenses coupled with leveraged balance sheet remain major headwinds. Uncertainty prevailing over global macroeconomic conditions as well as volatile supply-chain dynamics continue to be concerns.
A Look at Estimates
Itron’s revenues are suggested to improve 18.3% and 5.3% on a year-over-year basis in 2023 and 2024, respectively.
The bottom line is anticipated to rise 92% and 26.2% 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 $2.17 and $2.74, up 19.2% and 12.3%, respectively, in the past 60 days.
ITRI has delivered an earnings surprise of 266.3%, on average, in the trailing four quarters.
Other Key Picks
Some other top-ranked stocks in the broader technology space are Asure Software ASUR, Synopsys SNPS and VMware VMW. Each stock is sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Asure Software’s 2023 EPS has increased 35% in the past 60 days to 54 cents.
Asure Software’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average surprise being 676.4%. Shares of ASUR have surged 68.6% in the past year.
The Zacks Consensus Estimate for Synopsys’ fiscal 2023 EPS has gained 2.5% in the past 60 days to $11.09. SNPS’ long-term earnings growth rate is 16.4%. Shares of SNPS have climbed 43.4% in the past year.
The Zacks Consensus Estimate for VMware’s fiscal 2024 EPS has improved 5.9% in the past 60 days to $7.23.
VMware’s earnings outpaced the Zacks Consensus Estimate in two of the last four quarters, while missing it in the remaining quarters. The average earnings surprise stands at 1.2%. Shares of VMW have jumped 48.2% in the past year.
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