Badger Meter (BMI +1.49%) stock had soared by 16.7% for the week through Friday morning as the market digested the company's record-setting first-quarter results.
What Badger Meter does
The company generates around 85% of its revenues from selling utility water smart metering solutions, tools that enable utilities to more accurately measure their water and wastewater customers' usage, and bill them accordingly. It also sells instruments and sensors to detect leaks and deliver clean water. The other 15% comes from the flow instrumentation market, which serves the industrial sector.
NYSE: BMI
Key Data Points
Badger Meter's first quarter earnings
Along with Xylem and Roper Technologies' Neptune, Badger Meter dominates the North American utility water meter market -- together, they sell "roughly 85% of the water meters in the North American market," according to Badger Meter's SEC filings.
The good news is that the company's smart water meter sales are surging at the moment. A 29% increase in utility water sales led to an overall year-over-year sales increase of 23% for the company in the first quarter. In the earnings release, management pointed to the "ongoing favorable industry fundamentals, driving robust customer demand for our innovative smart water solutions."
Badger Meter's solutions are vital in reducing water waste, ensuring adequate water infrastructure, and monitoring leakage. Smart internet-enabled technology adds value to their solutions and enables the company to grow its software-as-a-service revenue over time and improve profit margins.
Image source: Getty Images.
A stock to buy?
The company is firing on all cylinders right now. Interestingly, its growth is not being powered in a meaningful way by the federal infrastructure spending enabled by 2021's Infrastructure Investment and Jobs Act. As CEO Kenneth Bockhorst noted on the earnings call, "We have long stated that we didn't anticipate or count on much in the way of infrastructure or other government funding to drive growth."
Based on that, investors shouldn't expect federal spending to move the needle much for this company in the future. Moreover, Bockhorst told investors its sales comparisons will get "more difficult as the year progresses."
While Badger Meter doesn't give guidance, investors will be able to get more color on the likely direction of this industry when Roper reports on April 26 and Xylem on May 2 -- two dates to look out for before buying Badger Meter stock.
