Badger Meter Inc.’s (BMI - Free Report) fourth-quarter 2016 earnings per share rose 10.5% year over year to 21 cents. However, earnings fell short of the Zacks Consensus Estimate of 23 cents.
Sales in the quarter declined 2.8% to $93.1 million, falling short of the Zacks Consensus Estimate of $96 million. Lower international sales as well as persistent weakness in key flow instrumentation markets, including oil and gas, led to the sales decline.
Cost and Margins
Cost of sales decreased 2.8% year over year to $59.6 million. Gross profit in the quarter was $33.5 million, down 2.7% from $34.5 million in the prior-year quarter. Gross margin was 36%, flat from the year-ago quarter.
Selling, engineering and administration expenses were flat year over year to $24.4 million. Operating income declined 4.4% to $9.1 million from $9.5 million in the year-earlier quarter. Consequently, operating margin contracted 10 bps to 9.8%.
Financial Position
Badger Meter reported cash and cash equivalents of $7.3 million at the end of 2016, down from $8.1 million at year-end 2015. The debt-to-total capitalization ratio was 12.9% at the end of 2016 as against 23.5% at year-end 2015.
Receivables were at $59.8 million at the end of 2016, higher than $56 million as of Dec 31, 2015. Inventories were $77.7 million at the end of 2016 compared with $79 million as of Dec 31, 2015.
2016 Performance
Badger Meter posted record earnings of $1.11 per share for 2016, which surged 23.3% year over year. Earnings missed the Zacks Consensus Estimate $1.12. Revenues for full-year 2016 increased 4.3% year over year to a record $393.8 million from $377.7 million in 2015. Revenues fell short of the Zacks Consensus Estimate of $401 million.
Outlook
Despite headwinds in material costs, Badger Meter remains optimistic about the consistent growth of new products in the municipal water market. Recovery in flow instrumentation market will drive growth in 2017. The company also stands to gain from robust fundamentals over its long-term growth strategies.
Share Price Performance
In the last one year, Badger Meter has underperformed the Zacks classified Instruments-Control sub-industry with respect to price performance. The stock gained around 22.5%, while the industry rose 38.2% over the same time frame.
Zacks Rank & Key Picks
Badger Meter currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same sector are Applied Optoelectronics, Inc. (AAOI - Free Report) , Axcelis Technologies, Inc. (ACLS - Free Report) and Acxiom Corporation .
Applied Optoelectronics has delivered a whopping average positive earnings surprise of 106.74% in the last four quarters. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Axcelis Technologies also boasts a Zacks Rank #1 and has delivered an impressive average positive earnings surprise of 151.25% for the trailing four quarters. Acxiom Corporation, another Zacks Rank #1 stock, has an average positive earnings surprise of 147.14% for the past four quarters.
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Badger Meter Inc.’s (BMI - Free Report) fourth-quarter 2016 earnings per share rose 10.5% year over year to 21 cents. However, earnings fell short of the Zacks Consensus Estimate of 23 cents.
Sales in the quarter declined 2.8% to $93.1 million, falling short of the Zacks Consensus Estimate of $96 million. Lower international sales as well as persistent weakness in key flow instrumentation markets, including oil and gas, led to the sales decline.
Cost and Margins
Cost of sales decreased 2.8% year over year to $59.6 million. Gross profit in the quarter was $33.5 million, down 2.7% from $34.5 million in the prior-year quarter. Gross margin was 36%, flat from the year-ago quarter.
Selling, engineering and administration expenses were flat year over year to $24.4 million. Operating income declined 4.4% to $9.1 million from $9.5 million in the year-earlier quarter. Consequently, operating margin contracted 10 bps to 9.8%.
Financial Position
Badger Meter reported cash and cash equivalents of $7.3 million at the end of 2016, down from $8.1 million at year-end 2015. The debt-to-total capitalization ratio was 12.9% at the end of 2016 as against 23.5% at year-end 2015.
Receivables were at $59.8 million at the end of 2016, higher than $56 million as of Dec 31, 2015. Inventories were $77.7 million at the end of 2016 compared with $79 million as of Dec 31, 2015.
2016 Performance
Badger Meter posted record earnings of $1.11 per share for 2016, which surged 23.3% year over year. Earnings missed the Zacks Consensus Estimate $1.12. Revenues for full-year 2016 increased 4.3% year over year to a record $393.8 million from $377.7 million in 2015. Revenues fell short of the Zacks Consensus Estimate of $401 million.
Outlook
Despite headwinds in material costs, Badger Meter remains optimistic about the consistent growth of new products in the municipal water market. Recovery in flow instrumentation market will drive growth in 2017. The company also stands to gain from robust fundamentals over its long-term growth strategies.
Share Price Performance
In the last one year, Badger Meter has underperformed the Zacks classified Instruments-Control sub-industry with respect to price performance. The stock gained around 22.5%, while the industry rose 38.2% over the same time frame.
Zacks Rank & Key Picks
Badger Meter currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same sector are Applied Optoelectronics, Inc. (AAOI - Free Report) , Axcelis Technologies, Inc. (ACLS - Free Report) and Acxiom Corporation .
Applied Optoelectronics has delivered a whopping average positive earnings surprise of 106.74% in the last four quarters. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Axcelis Technologies also boasts a Zacks Rank #1 and has delivered an impressive average positive earnings surprise of 151.25% for the trailing four quarters. Acxiom Corporation, another Zacks Rank #1 stock, has an average positive earnings surprise of 147.14% for the past four quarters.
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In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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