Badger Meter (NYSE:BMI) Surprises With Q3 Sales

Water control and measure company Badger Meter (NYSE:BMI) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 13.1% year on year to $235.7 million. Its GAAP profit of $1.19 per share was 9.3% above analysts’ consensus estimates.

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“We demonstrated solid operating leverage in the third quarter on strength in both sales and profitability as we continued to successfully integrate the SmartCover acquisition and build on record growth in our core business in recent periods," said Kenneth C. Bockhorst, Chairman, President and Chief Executive Officer.

Company Overview

The developer of the world’s first frost-proof water meter in 1905, Badger Meter (NYSE:BMI) provides water control and measure equipment to various industries.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Luckily, Badger Meter’s sales grew at an incredible 16.5% compounded annual growth rate over the last five years. Its growth surpassed the average industrials company and shows its offerings resonate with customers, a great starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Badger Meter’s annualized revenue growth of 16.1% over the last two years aligns with its five-year trend, suggesting its demand was predictably strong. Badger Meter’s recent performance shows it’s one of the better Inspection Instruments businesses as many of its peers faced declining sales because of cyclical headwinds.

This quarter, Badger Meter reported year-on-year revenue growth of 13.1%, and its $235.7 million of revenue exceeded Wall Street’s estimates by 1.8%.

Looking ahead, sell-side analysts expect revenue to grow 9.2% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is admirable and suggests the market sees success for its products and services.

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Operating Margin

Badger Meter has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 17.6%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Analyzing the trend in its profitability, Badger Meter’s operating margin rose by 4.8 percentage points over the last five years, as its sales growth gave it operating leverage.

This quarter, Badger Meter generated an operating margin profit margin of 19.6%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Badger Meter’s EPS grew at an astounding 23.1% compounded annual growth rate over the last five years, higher than its 16.5% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into the nuances of Badger Meter’s earnings can give us a better understanding of its performance. As we mentioned earlier, Badger Meter’s operating margin was flat this quarter but expanded by 4.8 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Badger Meter, its two-year annual EPS growth of 27.2% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q3, Badger Meter reported EPS of $1.19, up from $1.08 in the same quarter last year. This print beat analysts’ estimates by 9.3%. Over the next 12 months, Wall Street expects Badger Meter’s full-year EPS of $4.70 to grow 6.7%.

Key Takeaways from Badger Meter’s Q3 Results

We enjoyed seeing Badger Meter beat analysts’ revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Overall, we think this was a solid quarter with some key areas of upside. The stock traded up 2.4% to $192 immediately after reporting.

Indeed, Badger Meter had a rock-solid quarterly earnings result, but is this stock a good investment here? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.