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Why Is Badger Meter (BMI) Up 5.4% Since the Last Earnings Report?
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A month has gone by since the last earnings report for Badger Meter, Inc. (BMI - Free Report) . Shares have added about 5.4% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Badger Meter Q2 Earnings Top Estimates, Sales Lag
Badger Meter’s second-quarter 2017 earnings per share rose 12.5% year over year to a record $0.36 and also beat the Zacks Consensus Estimate of $0.35.
Sales in the quarter inched up 0.3% year over year to a record $104 million, but fell short of the Zacks Consensus Estimate of $108 million. Domestic residential and commercial municipal water product sales were flat year over year as some customers delayed orders to capitalize on the latest advancement in the ORION Cellular technology, the ORION Cellular Long-Term Evolution (LTE) endpoint, which began shipment in Jun 2017. Domestic sales of flow instrumentation products increased but were partially offset by fewer international projects. The oil and gas business also improved during the quarter.
Cost and Margins
Cost of sales decreased 2% year over year to $63 million. Gross profit in the quarter was $41 million, up 4% from $39.4 million in the prior-year quarter. Gross margin was 39.4%, a 150 basis points (bps) expansion from the year-ago quarter owing to pricing discipline, manufacturing cost controls and its strategy to acquire or consolidate much of distribution network. These actions helped negate the impact of higher brass costs.
Selling, engineering and administration expenses were flat year over year to $24.5 million owing mainly to staffing reductions in the flow instrumentation business in the second half of 2016 and lower health care expenses. Operating income went up 11% to $16.6 million from $14.9 million in the year-earlier quarter. Consequently, operating margin expanded 150 (bps) to 15.9%.
Financial Position
Badger Meter reported cash and cash equivalents of $13.8 million at the end of second-quarter 2017, up from $7.3 million at year-end 2016. Receivables were pegged at $64.4 million at the second quarter end, higher than $59.8 million as of Dec 31, 2016. Inventories were $74 million at the end of second quarter compared with $78 million as of Dec 31, 2016.
Badger Meter acquired D-Flow Technology AB of Luleå, Sweden in the second quarter. D-Flow Technology specializes in the design and development of ultrasonic technology, primarily for use in flow measurement. With this buyout, the company further strengthened its presence in the ultrasonic flowmeter market. The acquisition will help Badger Meter to further enhance its successful E-Series Ultrasonic product line, lower production costs and provide a platform for further advancement of ultrasonic capabilities.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
At this time, Badger Meter's stock has a strong Growth Score of A, though it is lagging a lot on the momentum front with an F. Following a similar course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for growth based on our styles scores.
Outlook
The stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.
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Why Is Badger Meter (BMI) Up 5.4% Since the Last Earnings Report?
A month has gone by since the last earnings report for Badger Meter, Inc. (BMI - Free Report) . Shares have added about 5.4% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Badger Meter Q2 Earnings Top Estimates, Sales Lag
Badger Meter’s second-quarter 2017 earnings per share rose 12.5% year over year to a record $0.36 and also beat the Zacks Consensus Estimate of $0.35.
Sales in the quarter inched up 0.3% year over year to a record $104 million, but fell short of the Zacks Consensus Estimate of $108 million. Domestic residential and commercial municipal water product sales were flat year over year as some customers delayed orders to capitalize on the latest advancement in the ORION Cellular technology, the ORION Cellular Long-Term Evolution (LTE) endpoint, which began shipment in Jun 2017. Domestic sales of flow instrumentation products increased but were partially offset by fewer international projects. The oil and gas business also improved during the quarter.
Cost and Margins
Cost of sales decreased 2% year over year to $63 million. Gross profit in the quarter was $41 million, up 4% from $39.4 million in the prior-year quarter. Gross margin was 39.4%, a 150 basis points (bps) expansion from the year-ago quarter owing to pricing discipline, manufacturing cost controls and its strategy to acquire or consolidate much of distribution network. These actions helped negate the impact of higher brass costs.
Selling, engineering and administration expenses were flat year over year to $24.5 million owing mainly to staffing reductions in the flow instrumentation business in the second half of 2016 and lower health care expenses. Operating income went up 11% to $16.6 million from $14.9 million in the year-earlier quarter. Consequently, operating margin expanded 150 (bps) to 15.9%.
Financial Position
Badger Meter reported cash and cash equivalents of $13.8 million at the end of second-quarter 2017, up from $7.3 million at year-end 2016. Receivables were pegged at $64.4 million at the second quarter end, higher than $59.8 million as of Dec 31, 2016. Inventories were $74 million at the end of second quarter compared with $78 million as of Dec 31, 2016.
Badger Meter acquired D-Flow Technology AB of Luleå, Sweden in the second quarter. D-Flow Technology specializes in the design and development of ultrasonic technology, primarily for use in flow measurement. With this buyout, the company further strengthened its presence in the ultrasonic flowmeter market. The acquisition will help Badger Meter to further enhance its successful E-Series Ultrasonic product line, lower production costs and provide a platform for further advancement of ultrasonic capabilities.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Badger Meter, Inc. Price and Consensus
Badger Meter, Inc. Price and Consensus | Badger Meter, Inc. Quote
VGM Scores
At this time, Badger Meter's stock has a strong Growth Score of A, though it is lagging a lot on the momentum front with an F. Following a similar course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for growth based on our styles scores.
Outlook
The stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.