Badger Meter (NYSE:BMI) stock closed 16.7% higher on Thursday, April 18, after the company delivered its Q1 financials. Badger Meter provides water solutions, including flow measurement, quality, and other system parameters. Its first-quarter sales and earnings surpassed analysts’ estimates.
The company’s solid sales growth, margin expansion, cash flow generation capabilities, and a debt-free balance sheet have supported its share price over the past year. BMI stock increased by over 49% in one year.
Q1 Snapshot
Badger Meter’s Q1 sales of $196 million increased by 23% year-over-year and exceeded analysts’ estimates of $182.3 million. The company’s total utility water product line sales increased 29% year-over-year. Moreover, BMI witnessed strong demand for its suite of utility smart water solutions. Furthermore, water quality, pressure, and network monitoring sales contributed to the top-line growth.
While its top line is benefitting from higher demand, BMI’s management warned that the company could face tough year-over-year comparisons in Q2, posing challenges.
Thanks to the higher sales, BMI’s operating margin expanded by 290 basis points in Q1. Further, the company’s earnings of $0.99 per share jumped 50% year-over-year and surpassed analysts’ average estimate of $0.82.
Is BMI Stock a Buy?
Wall Street analysts are cautiously optimistic about BMI stock. However, five-star analyst Ryan Connors of Northcoast Research upgraded Badger Meter to Hold from Sell after the stellar Q1 performance. The analyst believes that BMI’s premium valuation is justified, given its solid fundamentals and EPS growth.
Connors has a success rate of 68% and an average return of 13.7% in the one-year time frame.
BMI stock has one Buy and two Hold recommendations for a Moderate Buy consensus rating. The analysts’ average price target on BMI stock is $162.67, implying 8.86% downside potential from current levels.
