Strength Seen in Itron (ITRI): Can Its 3.7% Jump Turn into More Strength?

Itron (ITRI) shares ended the last trading session 3.7% higher at $125.07. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 4.9% loss over the past four weeks.

The increase in share price can be attributed to the announcement of a new partnership with Current Lighting Solutions to offer a smart lighting solution that boosts safety, energy efficiency, and operations. The solution combines Itron’s CityEdge management and control technologies with Current’s advanced LED fixtures, including its Evolve Roadway line. The partnership combines Current’s LED lights with Itron’s smart controls to help cities and utilities improve streetlight performance.

Itron is gaining from steady margin expansion and cash flow despite modest top-line pressure. A strong backlog and rising uptake of its grid edge intelligence platform position it to benefit from global energy, water and smart infrastructure trends. Long-term trends remain supportive, but near-term woes such as slower project deployments, regulatory complexity and delayed decisions are denting growth, prompting around 3% cut to full-year revenue guidance at the midpoint. Sales are now projected at $2.35-$2.4 billion, down from $2.4-$2.5 billion.

This energy and water meter company is expected to post quarterly earnings of $1.48 per share in its upcoming report, which represents a year-over-year change of -19.6%. Revenues are expected to be $576.45 million, down 6.3% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Itron, the consensus EPS estimate for the quarter has been revised marginally lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on ITRI going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Itron is a member of the Zacks Electronics - Testing Equipment industry. One other stock in the same industry, Ametek (AME), finished the last trading session 0.3% higher at $188.45. AME has returned 0.5% over the past month.

Ametek's consensus EPS estimate for the upcoming report has changed +0.3% over the past month to $1.75. Compared to the company's year-ago EPS, this represents a change of +5.4%. Ametek currently boasts a Zacks Rank of #2 (Buy).

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This article originally published on Zacks Investment Research (zacks.com).

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