BADGER METER INC (NYSE:BMI) stands out as a potential candidate for quality investors, meeting key criteria for long-term growth and financial health. The company, which provides flow measurement and water management solutions, demonstrates strong profitability, efficient capital allocation, and consistent growth—hallmarks of a quality investment.
Key Strengths of BMI for Quality Investors
- High Return on Invested Capital (ROIC): BMI’s ROIC (excluding cash and goodwill) is an impressive 48.7%, well above the 15% threshold for quality stocks. This indicates efficient use of capital to generate profits.
- Strong Revenue and EBIT Growth: Over the past five years, BMI has delivered 10.5% annual revenue growth and 20.5% EBIT growth, showing improving profitability.
- Exceptional Profit Quality: The company converts net income into free cash flow at a 126% rate over the past five years, well above the 75% benchmark, reflecting strong cash generation.
- Zero Debt: BMI has no outstanding debt, enhancing financial stability and reducing risk.
- Industry-Leading Margins: Operating margins of 20% and profit margins of 15.7% place BMI among the top performers in its sector.
Valuation Considerations
While BMI’s fundamentals are strong, its current valuation is high, with a P/E ratio of 53.7, above the S&P 500 average. However, its growth prospects and profitability may justify the premium for long-term investors.
Growth Outlook
Analysts expect BMI to maintain solid growth, with projected annual EPS growth of 14.9% and revenue growth of 10.5% in the coming years.
Our Caviar Cruise screener identifies more quality stocks like BMI, updated daily. For a deeper look, check the full fundamental analysis of BMI.
Disclaimer
This is not investment advice. Always conduct your own research before making investment decisions.
