Badger Meter Inc (NYSE:BMI): A Quality Stock Worth Considering
By Mill Chart
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Badger Meter Inc (NYSE:BMI) provides flow measurement, control products, and communications solutions for water utilities, municipalities, and commercial customers worldwide. Headquartered in Milwaukee, Wisconsin, the company offers smart water solutions under its BlueEdge brand, combining hardware, software, and real-time monitoring to optimize water management.
Quality investing focuses on identifying companies with strong financials, competitive advantages, and sustainable growth. These businesses often exhibit high returns on capital, consistent earnings growth, and efficient operations—making them attractive for long-term investors.
Why Badger Meter Inc Fits Quality Investing Criteria
Strong Revenue and EBIT Growth
Badger Meter Inc has demonstrated solid growth, with a 5-year revenue CAGR of 10.47% and EBIT growth of 20.53%. More importantly, EBIT growth outpaces revenue growth, indicating improving profitability—a key trait of quality businesses.
High Return on Invested Capital (ROIC)
A critical metric for quality investors, ROIC measures how efficiently a company generates profits from its capital. Badger Meter boasts an impressive ROIC (excluding cash and goodwill) of 48.72%, far exceeding the 15% threshold typically sought by quality investors.
Strong Profit Quality and Financial Health
The company’s 5-year average profit quality stands at 126.18%, meaning it converts net income into free cash flow at an exceptional rate. Additionally, Badger Meter has no debt, reinforcing its financial stability.
Consistent Margins and Competitive Position
Badger Meter maintains strong margins, with an operating margin of 20.03% and profit margin of 15.74%, both ranking in the top tier of its industry. These figures suggest pricing power and operational efficiency.
Fundamental Analysis Summary
Badger Meter Inc receives a fundamental rating of 7 out of 10, with standout scores in profitability (9/10) and financial health (8/10). The company excels in ROIC, margins, and cash flow generation, though its valuation appears high with a P/E ratio of 48.72.
For a deeper look at the analysis, see the full fundamental report.
Conclusion
Badger Meter Inc aligns well with quality investing principles, featuring strong growth, high returns on capital, and a debt-free balance sheet. While its valuation may give some investors pause, its financial strength and industry position make it a compelling candidate for further research.
