Badger Meter Inc (NYSE:BMI) reported fourth-quarter financial results that fell short of Wall Street's top-line expectations, leading to a sharp pre-market decline in its share price. The provider of smart water management solutions delivered solid year-over-year growth in both revenue and profit, but the quarterly sales figure missed analyst forecasts, prompting a negative market reaction.
Quarterly Performance Versus Estimates
The company reported fourth-quarter sales of $220.7 million, an 8% increase over the prior year's $205.2 million. However, this result came in below the analyst consensus estimate of approximately $234.4 million.
On the bottom line, Badger Meter reported diluted earnings per share (EPS) of $1.14, a 10% increase from $1.04 in Q4 2024. This narrowly surpassed the analyst estimate of $1.18 per share.
The market's immediate reaction was decisively negative, with shares trading down approximately 8.8% in pre-market activity following the earnings release. This suggests investor disappointment centered on the revenue miss, overshadowing the EPS beat and the company's continued margin expansion.
Full-Year 2025 Results and Strategic Highlights
For the full year 2025, Badger Meter achieved record results, demonstrating the underlying strength of its business model focused on smart water infrastructure.
- Record Sales: Full-year sales reached $916.7 million, an 11% increase over 2024.
- Profit Growth: Operating earnings grew 16% to $183.4 million, with operating profit margins expanding to 20.0% from 19.1%.
- Software Growth: Software-as-a-Service (SaaS) sales grew approximately 27% year-over-year to $74 million.
- Strong Cash Flow: The company generated record operating cash flow of $183.7 million.
A key strategic highlight was the contribution from the SmartCover acquisition, completed in January 2025. The acquisition, which adds sewer and stormwater monitoring capabilities, contributed approximately $40 million in sales for the 11 months it was owned in 2025. Management noted that SmartCover's profitability improved during the year due to higher sales volumes and cost management.
CEO Kenneth Bockhorst also highlighted a significant competitive win, with Badger Meter selected to modernize the water infrastructure for the Puerto Rico Aqueduct and Sewer Authority (PRASA) in what is described as "one of the world’s largest AMI deployments."
Management Outlook and Analyst Expectations
In its outlook, management expressed confidence in its ability to deliver, over a five-year horizon, high single-digit sales growth, year-over-year operating margin expansion, and free cash flow conversion in excess of 100% of earnings.
However, the company indicated that near-term growth may be uneven. It noted that the second half of 2025 and the first half of 2026 are being impacted by the conclusion of several large Advanced Metering Infrastructure (AMI) turnkey projects. Growth is expected to re-accelerate in the second half of 2026 as newly awarded projects begin their multi-year deployment phases.
This near-term dynamic creates a contrast with current analyst models. For the upcoming first quarter of 2026, analysts are estimating sales of approximately $244.7 million. For the full year 2026, the consensus sales estimate stands at about $1.01 billion, which would represent roughly a 10% increase over the record 2025 sales—consistent with the company's long-term high single-digit growth target.
Conclusion
Badger Meter's fourth-quarter earnings report paints a picture of a fundamentally healthy company executing its long-term strategy, as evidenced by record annual sales, strong profit growth, and a landmark contract win in Puerto Rico. The market's negative reaction appears primarily tied to the quarterly revenue miss against high expectations and commentary suggesting a temporary slowdown in growth momentum through the first half of 2026.
Investors will now watch closely for signs that the company's robust project pipeline, including the PRASA deployment, begins to translate into the re-accelerated sales growth management anticipates later this year.
For a detailed look at Badger Meter's historical earnings and future analyst estimates, visit the BMI earnings and estimates page on Chartmill.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, nor a recommendation to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
