What happened?
Shares of water control and measurement company Badger Meter (NYSE: BMI) jumped 7.3% in the afternoon session after the company reported third-quarter GAAP earnings per share above analyst estimates and pointed to stronger sales momentum into year-end. According to the company’s press release, GAAP earnings were $1.24 a share, a 2.5% beat versus the $1.21 consensus and up from $1.19 a year earlier. Operating margin held at 20.2%, in line with the same quarter last year. Revenue was $235.9 million, flat with a year earlier and 2.1% below the $241.1 million consensus, but the underlying trend was firmer: excluding the UDlive acquisition, utility water sales rose 5% from the second quarter as awarded AMI projects continued to ramp, with higher software revenue offsetting uneven project pacing. Flow instrumentation sales increased 2%. Gross margin benefited from higher sales and a better product mix. Management expects base revenue to improve both sequentially and year over year in the fourth quarter, despite fewer operating days, and expects that momentum to continue into 2027. The company also raised its annual dividend 10% to $1.76, the 34th consecutive increase, and repurchased about $55 million of stock in the quarter. Free cash flow margin was 17.1%, compared with 20.5% a year earlier.
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What is the market telling us
Badger Meter’s shares are somewhat volatile and have had 11 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock dropped 18.9% on the news that the company reported underwhelming first quarter results: sales, adjusted operating income and earnings per share fell short of Wall Street's estimates. Management attributed the weakness to "variability in project timing," essentially arguing that while the demand exists, the actual installation and billing of large-scale municipal projects shifted out of the first quarter. While the company expressed optimism for a "back-half weighted" 2026 and announced a strategic $100 million acquisition of UDlive to bolster its sewer-monitoring tech, investors are currently penalizing the stock for the near-term execution gap.
Badger Meter is down 18.5% since the beginning of the year, and at $143.70 per share, it is trading 23.5% below its 52-week high of $187.87 from November 2025. Despite the year-to-date decline, investors who bought $1,000 worth of Badger Meter’s shares 5 years ago would now be looking at an investment worth $1,375.
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