It has been about a month since the last earnings report for Badger Meter (BMI Quick QuoteBMI - Free Report) . Shares have added about 4% in that time frame, outperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Badger Meter due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

BMI Q2 Earnings Beat on Project Ramps

Badger Meter reported second-quarter 2026 earnings of $1.02 per share, down 12.8% year over year but 1.0% above the $1.01 consensus. Revenues of $222.32 million fell 6.6% but beat the $221.06 million estimate by 0.6%.

Sequential sales increased 10% as awarded utility projects began initial deployments and order rates improved from the first quarter. Utility water sales declined 8%, while flow instrumentation revenues rose 6% on strength in water-related markets.

BMI's Utility Sales Begin To Recover

Utility water sales were down 9% excluding two months of UDlive, reflecting uneven advanced metering infrastructure project pacing. However, organic utility sales improved 8% sequentially. Higher software and other BlueEdge beyond-the-meter sales partly offset lower AMI-related product revenues.

Shipments started for the PRASA project, while several other awarded projects entered early deployment. Management said the nine-project cohort remains broadly solid, although implementation can vary by project and remain uneven because of customer schedules and installation timing.

Badger Meter's Flow Business Adds Support

Flow instrumentation sales increased 6% year over year, supported by broad demand in water-related applications. The quarter also benefited from data-center orders for clamp-on meters and MAG meters used in cooling and flow-monitoring systems.

Management cautioned that the product line should still be viewed as a GDP-like, low-single-digit grower over the five-year strategic horizon. At the ACE26 trade show, customer interest also centered on ORION cellular technology, EyeOnWater Premium, the BEACON Field app and the Cobalt embedded artificial intelligence offering.

BMI Protects Margins Through Cost Discipline

Gross margin contracted 30 basis points to 40.8% as lower volumes and project mix weighed on profitability. The result remained within Badger Meter's normalized 39%-42% range. Operating earnings declined 12.2% to $39.38 million, while operating margin fell 110 basis points to 17.7%.

Base operating earnings, which exclude UDlive, decreased 9.5% to $40.62 million, with margin down 40 basis points to 18.4%. Selling, engineering and administration expenses declined 2.9% to $51.40 million as spending controls and lower incentive compensation offset acquisition-related costs. Electronic component costs and availability remain a watch item.

Badger Meter Works Down Working Capital

Free cash flow fell to $21.90 million from $40.60 million a year earlier. Cash from operations was $26.71 million, while capital expenditures totaled $4.84 million. Primary working capital rose to 22.9% of sales from 20.0% at the end of the first quarter.

During the quarter, BMI spent $94.38 million on acquisitions, $25.25 million on share repurchases and $11.59 million on dividends. It ended June with $95.73 million in cash and an undrawn $150 million credit facility. About $90 million remains under the repurchase authorization.

BMI Adds UDlive To Broaden Water Monitoring

UDlive contributed $2.03 million in sales for May and June and recorded an operating loss of $1.25 million. Its amortization expense was $0.80 million, and management expects ongoing annual intangible amortization of about $5.00 million.

The acquisition expands Badger Meter's sewer-line monitoring leadership and global capabilities. Management attributed the modest initial revenue contribution to timing and said integration progress and early commercial interest were strong. UDlive also complements SmartCover within the company's broader beyond-the-meter portfolio.

Badger Meter Reaffirms the 2026 Outlook

Management continues to expect base quarterly revenues to improve sequentially through the remainder of 2026. Third-quarter sales are expected to rise from the second quarter, while full-year revenues excluding UDlive are projected to be flattish with 2025. Year-over-year growth is expected to be weighted toward the fourth quarter.

Some awarded projects may reach full run rates by year-end, while others will not be at full run rate by then. The company also reaffirmed its five-year framework for high-single-digit sales growth, 10%-15% EPS growth and free cash flow conversion above 100% of net income.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, Badger Meter has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a score 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Badger Meter has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.