We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is BMI Stock Worth Buying After Its Q2 Earnings Beat and Pullback?
Read MoreHide Full Article
Key Takeaways
Badger Meter beat Q2 estimates, but earnings fell 12.8% and revenues declined 6.6% year over year.
BMI's sales rose 10% sequentially as awarded utility projects began deployments and order rates improved.
Badger Meter's cash and credit support flexibility, but margins and project timing remain key risks.
Badger Meter, Inc. (BMI - Free Report) has a cleaner entry point after a 33.5% decline over the past year, but the second-quarter beat does not settle the investment debate.
The company still has durable water-sector demand, improving sequential sales and a flexible balance sheet. The offset is lower year-over-year revenues, weaker margins, acquisition costs and a valuation that requires steady execution.
BMI's Q2 Beat Masks a Softer Revenue Base
Badger Meter reported second-quarter 2026 earnings of $1.02 per share, topping the Zacks Consensus Estimate of $1.01 by 1.0%. Revenues of $222.32 million beat the consensus mark of $221.06 million by 0.6%.
The beat is less convincing than the headline. Earnings fell 12.8% from the prior year, while revenues declined 6.6%, making the durability of the recovery more important than modest upside versus expectations.
Utility water sales fell 8%, or 9% excluding two months of UDlive, as advanced metering infrastructure deployments remained uneven. Flow instrumentation sales rose 6% on water-related demand.
Xylem Inc. (XYL - Free Report) gives investors broader water technology exposure across water and wastewater applications. Itron, Inc. (ITRI - Free Report) is relevant because it serves utilities with metering, communications and infrastructure solutions.
Badger Meter's Recovery Is Back-End Loaded
The strongest near-term positive was the 10% sequential increase in sales. Awarded utility projects began initial deployments, including PRASA and several others, while order rates improved from the first quarter.
Management expects base quarterly revenues to improve sequentially through the rest of 2026. Third-quarter sales are expected to rise from the second quarter, but year-over-year growth is expected to be heavily weighted toward the fourth quarter.
That timing matters. Full-year revenues excluding UDlive are still expected to be roughly flattish with 2025, and some awarded projects may not reach full run rates by year-end.
A larger project cohort provides more coverage, but customer schedules, installation timing and short-cycle municipal orders can still shift quarterly performance.
Image Source: Zacks Investment Research
BMI's Cash Position Supports Strategic Flexibility
Badger Meter generated free cash flow of $21.9 million in the quarter, down from $40.6 million a year earlier. Cash from operations was $26.71 million, while capital expenditures totaled $4.84 million.
The company ended June 2026 with $95.73 million in cash and an undrawn $150 million credit facility. This supports research, acquisitions, dividends and repurchases. Liquidity is not the same as accelerating cash generation. Primary working capital rose to 22.9% of sales from 20.0% at the end of the first quarter, reflecting project timing.
BMI spent $94.38 million on acquisitions, $25.25 million on share repurchases and $11.59 million on dividends during the quarter. Management still targets full-year free cash flow conversion above 100% of net income.
Badger Meter's Valuation Leaves Little Room
BMI trades at 28.48 times forward 12-month earnings and 19.02 times trailing 12-month enterprise value to EBITDA. Both are below the company’s five-year medians of 44.85 and 29.02, respectively.
That discount to history does not make the stock inexpensive. The enterprise value to EBITDA multiple remains above the Zacks sub-industry at 9.23 times and the S&P 500 at 18.24 times.
The $141 price target is based on 28.1 times forward 12-month earnings. That embeds confidence in project execution, margin discipline and profitable acquisition integration.
The margin setup leaves limited room for another setback. Gross margin slipped 30 basis points to 40.8%, while operating margin fell 110 basis points to 17.7%. Electronic component costs remain pressure points.
End Note
The bottom line is that Badger Meter’s pullback alone is not enough to make the stock a buy. Sequential sales improvement, early project deployments and a flexible balance sheet support the stock, but weaker year-over-year results and margin pressure keep the risk-reward balanced.
A stronger case would require more consistent project shipments, margin stabilization and clearer evidence that UDlive and other acquired assets can become profitable contributors.
View the Zacks #1 Rank List
Image: Bigstock
Is BMI Stock Worth Buying After Its Q2 Earnings Beat and Pullback?
Key Takeaways
Badger Meter, Inc. (BMI - Free Report) has a cleaner entry point after a 33.5% decline over the past year, but the second-quarter beat does not settle the investment debate.
The company still has durable water-sector demand, improving sequential sales and a flexible balance sheet. The offset is lower year-over-year revenues, weaker margins, acquisition costs and a valuation that requires steady execution.
BMI's Q2 Beat Masks a Softer Revenue Base
Badger Meter reported second-quarter 2026 earnings of $1.02 per share, topping the Zacks Consensus Estimate of $1.01 by 1.0%. Revenues of $222.32 million beat the consensus mark of $221.06 million by 0.6%.
The beat is less convincing than the headline. Earnings fell 12.8% from the prior year, while revenues declined 6.6%, making the durability of the recovery more important than modest upside versus expectations.
Badger Meter, Inc. Price and EPS Surprise
Badger Meter, Inc. price-eps-surprise | Badger Meter, Inc. Quote
Utility water sales fell 8%, or 9% excluding two months of UDlive, as advanced metering infrastructure deployments remained uneven. Flow instrumentation sales rose 6% on water-related demand.
Xylem Inc. (XYL - Free Report) gives investors broader water technology exposure across water and wastewater applications. Itron, Inc. (ITRI - Free Report) is relevant because it serves utilities with metering, communications and infrastructure solutions.
Badger Meter's Recovery Is Back-End Loaded
The strongest near-term positive was the 10% sequential increase in sales. Awarded utility projects began initial deployments, including PRASA and several others, while order rates improved from the first quarter.
Management expects base quarterly revenues to improve sequentially through the rest of 2026. Third-quarter sales are expected to rise from the second quarter, but year-over-year growth is expected to be heavily weighted toward the fourth quarter.
That timing matters. Full-year revenues excluding UDlive are still expected to be roughly flattish with 2025, and some awarded projects may not reach full run rates by year-end.
A larger project cohort provides more coverage, but customer schedules, installation timing and short-cycle municipal orders can still shift quarterly performance.
Image Source: Zacks Investment Research
BMI's Cash Position Supports Strategic Flexibility
Badger Meter generated free cash flow of $21.9 million in the quarter, down from $40.6 million a year earlier. Cash from operations was $26.71 million, while capital expenditures totaled $4.84 million.
The company ended June 2026 with $95.73 million in cash and an undrawn $150 million credit facility. This supports research, acquisitions, dividends and repurchases.
Liquidity is not the same as accelerating cash generation. Primary working capital rose to 22.9% of sales from 20.0% at the end of the first quarter, reflecting project timing.
BMI spent $94.38 million on acquisitions, $25.25 million on share repurchases and $11.59 million on dividends during the quarter. Management still targets full-year free cash flow conversion above 100% of net income.
Badger Meter's Valuation Leaves Little Room
BMI trades at 28.48 times forward 12-month earnings and 19.02 times trailing 12-month enterprise value to EBITDA. Both are below the company’s five-year medians of 44.85 and 29.02, respectively.
That discount to history does not make the stock inexpensive. The enterprise value to EBITDA multiple remains above the Zacks sub-industry at 9.23 times and the S&P 500 at 18.24 times.
The $141 price target is based on 28.1 times forward 12-month earnings. That embeds confidence in project execution, margin discipline and profitable acquisition integration.
The margin setup leaves limited room for another setback. Gross margin slipped 30 basis points to 40.8%, while operating margin fell 110 basis points to 17.7%. Electronic component costs remain pressure points.
End Note
The bottom line is that Badger Meter’s pullback alone is not enough to make the stock a buy. Sequential sales improvement, early project deployments and a flexible balance sheet support the stock, but weaker year-over-year results and margin pressure keep the risk-reward balanced.
A stronger case would require more consistent project shipments, margin stabilization and clearer evidence that UDlive and other acquired assets can become profitable contributors.
Currently, Badger Meter has a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.