2 months ago
55
Josh Kohn-Lindquist, The Motley Fool
Fri, July 24, 2026 astatine 12:43 PM CDT 3 min read
Shares of starring astute h2o metering solutions supplier Bader Meter (NYSE: BMI) are down 18% this week arsenic of 1 p.m. ET connected Friday aft the institution reported mixed second-quarter net connected Wednesday. Sales and net per stock dropped 7% and 13%, respectively, which ever-so-slightly apical Wall Street's debased expectations. However, contempt sneaking past analysts' hopes, the banal inactive sold off, arsenic the marketplace had hoped for a bigger imaginable rebound successful the 2nd fractional of the twelvemonth but lone got "flattish" income maturation guidance for 2026.
Badger Meter banal is down 34% implicit the past year, but I presumption this arsenic much of a buying accidental than a large interest for a mates of reasons.
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First, Badger Meter was priced for perfection passim astir of the past 5 years, trading astatine an mean of 42 times escaped currency travel (FCF). Its income maturation temporarily stalled and turned negative, leaving the institution trading astatine a overmuch much tenable 24 times FCF.
Second -- and portion a displacement from income doubling betwixt 2020 and 2025 to 2 consecutive quarters of declining gross mightiness look jarring -- it shouldn't beryllium to beryllium a semipermanent contented for Badger Meter. Instead, it seems to beryllium a culmination of unfortunate timing issues (linked to authorities budgetary issues oregon delays) that person resulted successful 9 large inferior projects being slated for deployment successful the 2nd fractional of 2026. Once these deployments instrumentality hold, Badger Meter's sequential income maturation should widen into the coming quarters, and investors should show it to guarantee it happens.
Zooming retired and removing this year's cyclicality and timing issues, Badger Meter's wide concern thesis remains successful place, successful my opinion. Water and metering infrastructure passim the U.S. (and successful galore parts of the satellite wherever the institution is expanding) request to not lone beryllium replaced but besides often updated with Badger's precocious metering infrastructure.
Growing its dividend for 21 consecutive years portion delivering 13% annualized full returns implicit the aforesaid period, Badger Meter remains an elite, steady-Eddie compounder, yet trading astatine a precise tenable terms again.
Should you bargain banal successful Badger Meter close now?
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