Itron Stock Up 33.1% in a Year: Will the Rally Continue?

Itron's ITRI shares have been performing well on the trading front, with a gain of 33.1% year to date compared with 19.2% and 2.5% growth of the S&P 500 composite and the sub-industry, respectively. 

The stock is down 16.4% from its 52-week high level of $113.07, reflecting further potential upside.

Headquartered in Liberty Lake, WA, Itron is one of the leading global suppliers of a wide range of standard, advanced and smart meters and meter communication systems. It also provides networks and communication modules, software, services and sensors for the effective management of electricity, gas and water resources for its consumers.

With healthy fundamentals and strong growth opportunities, this Zacks Rank #2 (Buy) stock appears to be a solid investment option at present.

Apart from a favorable rank, ITRI has a Growth Score of B. Per Zacks' proprietary methodology, stocks with a combination of a Zacks Rank #1 (Strong Buy) or 2 and  a Growth Score of A or B offer solid investment opportunities.

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The company's earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters with an average surprise of 57%.

 

Steady Demand Trends

Steady market demand remains the primary catalyst. The company recently posted its second-quarter 2024 results wherein revenues of $609 million beat the Zacks Consensus Estimate of $600 million. The top line expanded 13% (up 13% at constant currency) year over year.

Successful operational execution and conversion of previously constrained revenues aided the top-line growth. Itron's bookings were $447 million, and its backlog amounted to $4.1 billion at the end of the reported quarter.

Networked Solutions' revenues totaled $412.7 million (67.8%), up 14% year over year, driven by current and new project deployments. Outcomes' revenues of $77.8 million (12.8%) increased 16% on a year-over-year basis attributed to higher recurring and one-time services revenues.

Momentum in the Grid Edge Intelligence platform augurs well. The platform's growth is being driven by various factors, including data center-related demand growth, reindustrialization and production localization, as well as electrification of transportation and homes. Itron added that automation of water infrastructure, safety applications for gas customers and the digitalization of its operations were other growth drivers.

Also, the acquisition of Elpis Squared expanded the Grid Edge Intelligence platform's solutions. Management noted that its customers are increasingly deploying new digital technology and non-wires grid solutions. This represents a strong opportunity for ITRI.

Solid Outlook

Itron anticipates 2024 bookings to result in a book-to-bill ratio of at least 1:1.

For the third quarter of 2024, ITRI expects revenues to be between $590 million and $600 million. Non-GAAP EPS is anticipated to be in the range of $1.10-$1.20. The Zacks Consensus Estimate for both top and bottom lines is pegged at $597 million and $1.10 per share.

The company has revised its full-year revenue outlook for 2024. Management now projects revenues to be between $2.385 billion and $2.415 billion compared with earlier guidance of $2.275 to $2.375 billion.

Non-GAAP EPS is currently estimated in the $4.45-$4.65 band compared with of $3.40-$3.80 projected in February 2024.

Estimates Northward Bound

The Zacks Consensus Estimate for ITRI's 2024 and 2025 revenues is pegged at $2.41 billion and $2.5 billion, respectively, indicating growth of 10.8% and 3.8% from the year-ago levels.

The consensus estimated figures for 2024 and 2025 EPS are expected to rise 33.3% and 3.6% from the prior-year actuals of $4.48 and $4.64, respectively.

The figures of consensus mark for 2024 and 2025 EPS have increased 12% and 5.9%, respectively, in the past 60 days, reflecting analysts' optimism.

ITRI's long-term earnings growth rate is pegged at 26%.

Headwinds Persist

However, rising operating expenses and stiff competition amid a soft macroeconomic backdrop remain concerns.

In the second quarter of 2024, non-GAAP operating expenses of $141.1 million jumped 6.6% year over year due to higher sales and general and administrative costs. These factors might exert pressure on the margins, at least in the near term.

Itron also has a leveraged balance sheet. As of Jun 30, 2024, the company's cash and cash equivalents totaled $920.6 million. Long-term debt at the end of the second-quarter 2024 was $1.24 billion.

Other Stocks to Consider

Other top-ranked stocks worth consideration in the broader technology space are Badger Meter BMI, Manhattan Associates MANH and ANSYS ANSS. Badger Meter and Manhattan Associates sport a Zacks Rank #1 each, while ANSYS carries a Zacks Rank #2 at present.

The Zacks Consensus Estimate for Badger Meter's 2024 EPS is pegged at $4.06, up 4.4% in the past 30 days. BMI's earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 12.9%. The long-term earnings growth rate is 17.9%. Its shares have risen 12.5% in the past year.

The Zacks Consensus Estimate for ANSS' 2024 earnings is pegged at $9.72, up 3.7% in the past 30 days. ANSS' earnings beat the Zacks Consensus Estimate in three of the last four quarters while missing once, with the average surprise being 4.8%. Its shares have risen 3.3% in the past year.

The Zacks Consensus Estimate for MANH's 2024 EPS is pegged at $4.26. MANH's earnings beat the Zacks Consensus Estimate in each of the last four quarters, with the average surprise being 26.6%. The stock has surged 28.4% in the past year.

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