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Badger Meter Stock Surges 28% YTD: Will the Rally Continue?
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Badger Meter Inc (BMI - Free Report) stock has gained 27.9% in the year-to-date (YTD) period compared with the S&P 500 composite and the sub-industry’s growth of 15.9% and 7.6%, respectively.
Solid financial performance is buoying the stock’s growth trajectory. BMI’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 12.9%.
The company is currently trading at a nearly 6.1% discount to its 52-week high of $210.30, reached on July 29, 2024. This pullback from the peak might offer a strategic buying opportunity for investors looking to capitalize on potential future gains.
Image Source: Zacks Investment Research
What's Driving BMI Stock's Performance?
BMI’s performance is driven by increased adoption of its differentiated smart water solutions and smooth operational execution. Demand for digital smart water solutions has been increasing, thanks to changing secular challenges.
In the last reported quarter, sales jumped 23% year over year to $216.7 million, marking the first ever quarter with sales of more than $200 million. Apart from stable demand, smooth operational execution and accretive customer backlog conversion acted as tailwinds. Utility water sales increased 26% on the back of strong AMI demand (including ORION Cellular endpoints, BEACON SaaS and mechanical and E-Series Ultrasonic meters). Stable demand across water-focused end markets boosted Flow Instrumentation sales, which were up 5% year over year.
Image Source: Zacks Investment Research
A favorable sales mix and selling, engineering and administration (“SEA”) expense leverage are driving margin performance. In the second quarter, SEA leverage improved to 20.2% from 22.7% in the prior-year quarter. Operating earnings were $41.6 million or 19.2% of sales compared with $29.5 million or 16.8% of sales in the year-ago quarter.
The company recently introduced the BlueEdge framework to simplify its comprehensive suite of scalable water solutions. BlueEdge platform is an umbrella term that combines water technology, software and services to enhance customer experience with efficient water management. Blue Edge can be customized to address applications for the entire water cycle and will also serve as a ‘strategic lens’ for the company to assess growth investments.
Various favorable macroeconomic drivers for the water industry growth, along with a strong opportunity funnel, bid pipeline, order book rates and increasing SaaS revenues, bode well for the long term. This is likely to drive the financial performance and propel the stock's growth trajectory.
Nonetheless, management expects to witness tougher year-over-year comparisons (as the year progresses) and higher expenses owing to incremental growth investments. An uncertain global macroeconomic backdrop, forex volatility and intensified competition are added headwinds.
Estimates Northbound for BMI
The Zacks Consensus Estimate for Badger Meter’s EPS is pinned at $4.06 and $4.60 for 2024 and 2025, respectively, indicating an increase of 29.3% and 13.3% from the year-ago levels.
In the past 60 days, the Zacks Consensus Estimate for BMI’s 2024 and 2025 earnings has increased 3% and 6.2%, respectively, reflecting analysts’ optimism.
The Zacks Consensus Estimate for revenues is pegged at $821.9 million and $891.8 million for 2024 and 2025, respectively, implying a rise of 16.8% and 8.5% year over year.
BMI’s Favorable Zacks Rank
With healthy fundamentals and strong growth opportunities, this Zacks Rank #1 (Strong Buy) company appears to be a solid investment option at the moment.
Apart from a favorable rank, BMI has Growth Score of B. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 or 2 (Buy) and Growth Score of A or B offer solid investment opportunities.
The Zacks Consensus Estimate for Adobe’s fiscal 2024 EPS is pegged at $18.16, which remained unchanged in the past 30 days. ADBE’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 2.7%. The long-term earnings growth rate is 13%. Its shares have risen 28.3% in the past year.
The Zacks Consensus Estimate for ANSS’ 2024 earnings is pegged at $9.72 per share, which rose 3.7% in the past 60 days. ANSS’ earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed the mark once, the average surprise being 4.8%. Its shares have lost 2.6% in the past year.
The Zacks Consensus Estimate for MANH’s 2024 EPS is pegged at $4.26, which rose 9.2% in the past 60 days. MANH’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 26.6%. The stock has surged 28.3% in the past year.
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Badger Meter Stock Surges 28% YTD: Will the Rally Continue?
Badger Meter Inc (BMI - Free Report) stock has gained 27.9% in the year-to-date (YTD) period compared with the S&P 500 composite and the sub-industry’s growth of 15.9% and 7.6%, respectively.
Solid financial performance is buoying the stock’s growth trajectory. BMI’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 12.9%.
The company is currently trading at a nearly 6.1% discount to its 52-week high of $210.30, reached on July 29, 2024. This pullback from the peak might offer a strategic buying opportunity for investors looking to capitalize on potential future gains.
Image Source: Zacks Investment Research
What's Driving BMI Stock's Performance?
BMI’s performance is driven by increased adoption of its differentiated smart water solutions and smooth operational execution. Demand for digital smart water solutions has been increasing, thanks to changing secular challenges.
In the last reported quarter, sales jumped 23% year over year to $216.7 million, marking the first ever quarter with sales of more than $200 million. Apart from stable demand, smooth operational execution and accretive customer backlog conversion acted as tailwinds. Utility water sales increased 26% on the back of strong AMI demand (including ORION Cellular endpoints, BEACON SaaS and mechanical and E-Series Ultrasonic meters). Stable demand across water-focused end markets boosted Flow Instrumentation sales, which were up 5% year over year.
Image Source: Zacks Investment Research
A favorable sales mix and selling, engineering and administration (“SEA”) expense leverage are driving margin performance. In the second quarter, SEA leverage improved to 20.2% from 22.7% in the prior-year quarter. Operating earnings were $41.6 million or 19.2% of sales compared with $29.5 million or 16.8% of sales in the year-ago quarter.
The company recently introduced the BlueEdge framework to simplify its comprehensive suite of scalable water solutions. BlueEdge platform is an umbrella term that combines water technology, software and services to enhance customer experience with efficient water management. Blue Edge can be customized to address applications for the entire water cycle and will also serve as a ‘strategic lens’ for the company to assess growth investments.
Various favorable macroeconomic drivers for the water industry growth, along with a strong opportunity funnel, bid pipeline, order book rates and increasing SaaS revenues, bode well for the long term. This is likely to drive the financial performance and propel the stock's growth trajectory.
Nonetheless, management expects to witness tougher year-over-year comparisons (as the year progresses) and higher expenses owing to incremental growth investments. An uncertain global macroeconomic backdrop, forex volatility and intensified competition are added headwinds.
Estimates Northbound for BMI
The Zacks Consensus Estimate for Badger Meter’s EPS is pinned at $4.06 and $4.60 for 2024 and 2025, respectively, indicating an increase of 29.3% and 13.3% from the year-ago levels.
In the past 60 days, the Zacks Consensus Estimate for BMI’s 2024 and 2025 earnings has increased 3% and 6.2%, respectively, reflecting analysts’ optimism.
The Zacks Consensus Estimate for revenues is pegged at $821.9 million and $891.8 million for 2024 and 2025, respectively, implying a rise of 16.8% and 8.5% year over year.
BMI’s Favorable Zacks Rank
With healthy fundamentals and strong growth opportunities, this Zacks Rank #1 (Strong Buy) company appears to be a solid investment option at the moment.
Apart from a favorable rank, BMI has Growth Score of B. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 or 2 (Buy) and Growth Score of A or B offer solid investment opportunities.
Other Stocks to Consider
Some other top-ranked stocks in the broader technology space are Manhattan Associates (MANH - Free Report) , Adobe (ADBE - Free Report) and ANSYS (ANSS - Free Report) . While Manhattan Associates sports a Zacks Rank #1, Adobe and ANSYS carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Adobe’s fiscal 2024 EPS is pegged at $18.16, which remained unchanged in the past 30 days. ADBE’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 2.7%. The long-term earnings growth rate is 13%. Its shares have risen 28.3% in the past year.
The Zacks Consensus Estimate for ANSS’ 2024 earnings is pegged at $9.72 per share, which rose 3.7% in the past 60 days. ANSS’ earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed the mark once, the average surprise being 4.8%. Its shares have lost 2.6% in the past year.
The Zacks Consensus Estimate for MANH’s 2024 EPS is pegged at $4.26, which rose 9.2% in the past 60 days. MANH’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 26.6%. The stock has surged 28.3% in the past year.