Shares of leading water management and advanced metering infrastructure (AMI) provider Badger Meter (BMI 14.83%) are down 10% as of 11 a.m. ET on Wednesday following the company's fourth-quarter earnings release. For the full year, revenue, earnings per share (EPS), and free cash flow (FCF) grew by 11%, 13%, and 19%, respectively. However, Badger Meter's sales only rose by 8% in Q4 -- and just 2% on an organic basis -- and it fell short of Wall Street's guidance, prompting today's decline. The stock is now down roughly 30% over the last year, following today's slide.
NYSE: BMI
Key Data Points
Is Badger Meter a falling knife or a discounted buy?
I certainly understand the market's reaction today. Badger Meter's $221 million in Q4 sales was $11 million short of expectations. This miss is quite large. However, I'd argue a lot of things are going right operationally for Badger Meter:
- margins continue to improve as the company shifts toward tech-focused solutions
- Smart Cover (a 2025 acquisition for Badger) grew sales by 25% in 2025
- landed the largest deal in company history for a project in Puerto Rico that will start in 2026
- Software-as-a-Service sales grew by 27% and are now close to 10% of total sales
Image source: Getty Images.
Best yet, Chief Executive Officer Kenneth Bockhorst explained that things should turn around with time, stating,
The second half of 2025 included a concentrated mix of concluding AMI turnkey projects, resulting in base revenue growth that was lower than our five-year forward outlook. Looking ahead, we expect this dynamic to persist through the first half of 2026, until several awarded projects begin multi-year turnkey deployments.
After trading at an average of 43 times FCF over the last five years -- so its valuation was probably a little ahead of itself -- Badger Meter has dropped and now trades at a very reasonable 26 times FCF. I have been and will continue to buy Badger Meter in 2026, and I think it remains an excellent long-term holding, as it brings the world's outdated water infrastructure into the modern era.
