Badger Meter (BMI 10.66%) inventory jumped 10.7% on Thursday, following the water expertise specialist’s launch of better-than-expected outcomes for the primary quarter of 2023. Buyers’ delight is attributable to each income and earnings simply surpassing Wall Avenue’s expectations.
A virtually 11% post-earnings transfer in both path is not unusual amongst tech shares and different shares that are usually unstable. However such an upward transfer is comparatively uncommon — and thus, significantly noteworthy — for a long-established, secure, dividend-paying industrial firm.
Badger Meter’s key numbers
|Metric||Q1 2022||Q1 2023||Change YOY|
|Income||$132.4 million||$159.1 million||20%|
|GAAP working earnings||$18.9 million||$25.0 million||32%|
|GAAP web earnings||$14.4 million||$19.4 million||35%|
|GAAP earnings per share (EPS)||$0.49||$0.66||35%|
Wall Avenue was searching for EPS of $0.55 on income of $143.6 million. So the corporate sped by each expectations.
Badger Meter generated money of $18 million operating its operations throughout the quarter. It has a wholesome stability sheet, ending the quarter with money and money equivalents of $128.3 million and no long-term debt.
What occurred with Badger Meter within the quarter?
- Water utility gross sales grew 20% 12 months over 12 months, pushed by continued sturdy adoption of the corporate’s mobile superior metering infrastructure (AMI) resolution and better water meter volumes. The acquisition of Syrinix (lined under) additionally contributed to gross sales progress.
- Circulation instrumentation product gross sales rose 22% 12 months over 12 months, with “sturdy order demand throughout the water-focused finish markets and enhancing provide chain dynamics,” the corporate mentioned within the earnings launch.
- The corporate accomplished the acquisition of Syrinix at the start of the 12 months for $18 million. CEO Kenneth Bockhorst opined within the earnings launch that this acquisition extends the corporate’s “differentiated sensible water choices with stress monitoring and leak detection capabilities.”
- It had document backlog on the finish of the quarter, which is spectacular, given its sturdy and record-high gross sales within the quarter.
What the CEO needed to say
This is a part of CEO Bockhorst’s remark within the earnings launch:
We generated an all-time excessive quarterly income complete within the first quarter, delivering 20% gross sales progress reflective of favorable business fundamentals, wholesome demand for our modern sensible water options, and excellent execution on the a part of our workers and provide base […]. This, in flip, led to working revenue margin enchancment, which additionally benefited from structural combine enchancment, value-based pricing, stabilization of inflationary pressures and promoting, engineering and administration (SEA) leverage.
Within the earnings launch, the corporate supplied a constructive 2023 outlook, although supplied no particular numbers. It mentioned that “demand traits in our markets stay wholesome” and “provide chain reduction and steadying inflationary headwinds, together with stable operational execution, lay the inspiration for margin resilience for the stability of 2023.”
Price a spot in your watch record
Badger Meter inventory deserves at the very least a spot on most buyers’ watch lists. Its operations closely (although not solely) fall inside one among my favourite broad teams — water. It is a house with stable long-term progress potential as a result of local weather change is inflicting recent water to turn into more and more scarce in the USA and internationally.
Not solely have shares simply outperformed the S&P 500 thus far this 12 months, however they’ve additionally achieved so over the mid, lengthy, and very-long phrases. Furthermore, shares pay a modest dividend, which is presently yielding about 0.7%.
Beth McKenna has no place in any of the shares talked about. The Motley Idiot has no place in any of the shares talked about. The Motley Idiot has a disclosure coverage.