Badger Meter, Inc. Hit a 52 Week High, Can the Run Continue?

Have you been paying attention to shares of Badger Meter BMI? Shares have been on the move with the stock up 6% over the past month. The stock hit a new 52-week high of $215.94 in the previous session. Badger Meter has gained 38.4% since the start of the year compared to the 20.3% move for the Zacks Computer and Technology sector and the 11.1% return for the Zacks Instruments - Control industry.

What's Driving the Outperformance?

The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on July 19, 2024, Badger Meter reported EPS of $1.12 versus consensus estimate of $0.98 while it beat the consensus revenue estimate by 7.86%.

For the current fiscal year, Badger Meter is expected to post earnings of $4.09 per share on $821.88 million in revenues. This represents a 30.25% change in EPS on a 16.81% change in revenues. For the next fiscal year, the company is expected to earn $4.66 per share on $891.5 million in revenues. This represents a year-over-year change of 13.92% and 8.47%, respectively.

Valuation Metrics

Badger Meter may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

Badger Meter has a Value Score of D. The stock's Growth and Momentum Scores are B and B, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 52.3X current fiscal year EPS estimates, which is a premium to the peer industry average of 25.4X. On a trailing cash flow basis, the stock currently trades at 51.9X versus its peer group's average of 20.7X. Additionally, the stock has a PEG ratio of 2.92. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Badger Meter currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Badger Meter meets the list of requirements. Thus, it seems as though Badger Meter shares could have potential in the weeks and months to come.

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