A month has gone by since the last earnings report for Badger Meter (BMI). Shares have lost about 7.4% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Badger Meter due for a breakout? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent catalysts for Badger Meter, Inc. before we dive into how investors and analysts have reacted as of late.
Badger Meter's Q3 Earnings Surpass Estimates
Badger Meter reported earnings per share of $1.19 for third-quarter 2025, which surpassed the Zacks Consensus Estimate by 7.2%. Also, the bottom line compared favorably with the year-ago quarter’s EPS of $1.08.
Quarterly net sales were $235.7 million, up 13.1% from $208.4 million in the year-ago quarter, driven by higher utility water sales. The Zacks Consensus Estimate was pegged at $229.4 million.
Management highlighted that although the company navigates ongoing macroeconomic, trade and policy challenges, demand for its industry-leading cellular AMI and BlueEdge smart water management solutions remains robust. The company is confident that the long-term trends driving digital water technology adoption among utilities and commercial and industrial customers will sustain its revenue growth.
The company is well-positioned to invest in innovation and pursue strategic, value-driven acquisitions with another quarter of strong free cash flow. It remains on track to realize the expected sales and cost synergies from the SmartCover acquisition.
Segmental Performance
In the quarter under review, utility water sales rose 14% year over year. Even excluding SmartCover, utility water sales were up 8%. The growth was driven by higher ultrasonic meter volumes, increased BEACON Software-as-a-Service sales and stronger water quality product demand.
Flow instrumentation sales grew 4% year over year, as strength in water-related markets offset softer demand in deemphasized non-water applications.
Other Details
In the third quarter, gross profit was $95.8 million, up from $83.9 million in the prior-year quarter. Gross margin was 40.7%, up 50 basis points (bps) year over year.
Gross margin continued to benefit from ongoing structural mix improvements, while implemented price increases helped offset some tariff-related cost pressures during the quarter. Although the trade environment remains dynamic, it has raised its historical gross margin range of 38%–40% to a new normalized range of 39%–42%.
Operating earnings jumped 13% year over year to $46.1 million, while operating margin declined 10 bps to 19.6% from 19.5%.
Selling, engineering and administration (SEA) expenses rose 11.8% year over year to $49.8 million. This increase was mainly driven by the addition of SmartCover, which included $1.6 million in intangible asset amortization. Base SEA expenses rose 3% year over year, reflecting a $1.8 million benefit from a deferred compensation plan tied to the stock price change during the quarter. Overall, SEA as a percentage of sales rose slightly to 21.1% from 20.8% in the prior-year quarter.
Cash Flow & Liquidity
In the third quarter of 2025, Badger Meter generated $51.3 million of net cash from operating activities compared with $45.1 million a year ago.
As of Sept. 30, 2025, the company had $201.7 million of cash and cash equivalents and $153.4 million of total current liabilities compared with the respective figures of $165.2 million and $138.7 million as of June 30, 2025.
Outlook
The company remains confident in its long-term growth prospects, supported by a robust opportunity pipeline and strong demand for its smart water management solutions. It expects to achieve an average high single-digit top-line growth rate over the next five years, driven by continued technology adoption and strategic pricing initiatives that help offset tariff impacts.
With a raised normalized gross margin range of 39–42% and consistent free cash flow generation, the company is well-positioned to invest in innovation and pursue disciplined, value-creating acquisitions such as SmartCover. Management remains focused on executing its strategic priorities while staying agile amid evolving macroeconomic, trade and supply chain conditions.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a upward trend in fresh estimates.
VGM Scores
At this time, Badger Meter has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for value investors.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Badger Meter has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Badger Meter, Inc. (BMI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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