BADGER METER INC (NYSE:BMI) – A Quality Stock with Strong Fundamentals

BADGER METER INC (NYSE:BMI) stands out as a high-quality stock based on our Caviar Cruise screening strategy. The company demonstrates strong revenue and profit growth, high returns on invested capital, and solid financial health, making it a compelling candidate for long-term investors.

Key Strengths of BMI

• Revenue & Profit Growth: Over the past five years, BMI has delivered a revenue growth CAGR of 9.3% and an EBIT growth CAGR of 20.5%, indicating strong operational performance.
• High Return on Invested Capital (ROIC): With an ROIC (excluding cash and goodwill) of 48.7%, BMI efficiently generates profits from its capital investments, outperforming most industry peers.
• Strong Profit Quality: The company converts 126% of its net income into free cash flow, well above our 75% threshold, reflecting high earnings quality.
• Minimal Debt Burden: BMI has no debt, giving it financial flexibility and reducing risk.
• Improving Profitability: Operating and profit margins have expanded over time, reinforcing BMI’s competitive position.

Fundamental Analysis Summary

BMI earns a fundamental rating of 7/10, with high marks in profitability (9/10) and financial health (8/10). The company excels in key metrics like ROIC (16.99%), operating margin (20.03%), and profit margin (15.74%). While its valuation appears expensive (P/E of 54.31), this is partly justified by its strong growth prospects, with expected annual earnings growth of 12.8% over the next few years.

For investors seeking high-quality businesses with consistent growth and financial strength, BMI is worth further consideration.

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For a deeper dive, review the full fundamental report on BMI.

Disclaimer

This is not investing advice. Always conduct your own research before making investment decisions.