It has been about a month since the last earnings report for Badger Meter (BMI). Shares have added about 8.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Badger Meter due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Badger Meter's Q4 Earnings Miss Estimates
Badger Meter reported earnings per share (EPS) of $1.14 for fourth-quarter 2025, which missed the Zacks Consensus Estimate by 0.9%. However, the bottom line compared favorably with the year-ago quarter’s EPS of $1.04.
Quarterly net sales were $220.7 million, up 7.6% from $205.2 million in the year-ago quarter, driven by higher utility water sales. The Zacks Consensus Estimate was pegged at $230.8 million.
For full-year 2025, the company reported sales of $916.7 million, representing an 11% year-over-year increase. EPS increased approximately 13% in 2025 to $4.79 from $4.23 reported in 2024.
Management highlighted that the company’s performance in 2025 marked double-digit revenue growth, expanded profit margins and record free cash flow conversion. Sustained demand, underpinned by long-term secular trends supporting the adoption of smart water management solutions, continues to drive strong, profitable top-line growth.
The company’s 2025 results marked another year of record sales, profitability and cash flow, supported by sustained demand for its smart water management solutions across the entire BlueEdge portfolio. The successful completion of several AMI projects, along with newly awarded projects scheduled to begin implementation in 2026, underscores the clear value proposition driving adoption of its industry-leading cellular AMI solution.
In early 2025, the company deployed available capital to acquire SmartCover, broadening its portfolio to include enhanced sewer monitoring and stormwater management hardware and software capabilities. The integration of SmartCover into the BlueEdge suite strengthens its position for long-term growth across the entire water cycle.
Segmental Performance
In the quarter under review, utility water sales rose 9% year over year. Even excluding SmartCover, utility water sales were up 2%. The growth was driven by continued customer adoption of digital smart water solutions, including higher sales of ultrasonic meters, ORION Cellular radios, BEACON Software-as-a-Service (SaaS) and water quality offerings.
Flow instrumentation sales were mainly flat year over year, as modest growth in water-focused end markets was offset by declines in de-emphasized applications.
Other Details
In the fourth quarter, gross profit was $93 million, up from $82.8 million in the prior-year quarter. Gross margin was 42.1%, up 180 basis points (bps) year over year. Gross margin continued to benefit from a favorable structural sales mix, led by above line average contributions from ultrasonic meters, cellular AMI, water quality and SmartCover sales.
Operating earnings jumped around 10% year over year to $43.1 million, while operating margin expanded 40 bps to 19.5% from 19.1%.
Selling, engineering and administration (SEA) expenses rose 14.7% year over year to $49.9 million. This increase was mainly driven by the addition of SmartCover, which included $1.6 million in intangible asset amortization. Base SEA expenses rose 2.9% year over year. Overall, SEA as a percentage of sales rose to 22.6% from 21.2%.
Badger Meter has been selected to help modernize Puerto Rico’s water infrastructure following a rigorous, multi-year competitive pilot conducted by the Puerto Rico Aqueduct and Sewer Authority (PRASA). Under the project, PRASA will deploy Badger Meter’s cellular advanced metering infrastructure (AMI) solution, including E-Series Ultrasonic meters, ORION Cellular endpoints and BEACON SaaS. The initiative is expected to strengthen system resiliency while improving operational efficiency, reducing non-revenue water and streamlining billing for approximately 1.6 million service connections.
Cash Flow & Liquidity
In the fourth quarter of 2025, Badger Meter generated $54.8 million of net cash from operating activities compared with $52.1 million a year ago.
As of Dec. 31, 2025, the company had $226 million of cash and cash equivalents and $150.7 million of total current liabilities compared with the respective figures of $201.7 million and $153.4 million as of Sept. 30, 2025.
Outlook
Management highlighted that the company entered 2026 with strong confidence in its ability to deliver high single-digit sales growth, continued operating margin expansion and free cash flow conversion exceeding 100% of earnings over the next five years. This outlook is supported by growth in its industry-leading cellular AMI installed base, accelerating adoption of BlueEdge technologies and value-accretive international expansion, with the PRASA AMI project exemplifying the scale and quality of opportunities driving its long-term growth.
Base revenue growth in the second half of 2025 was tempered by the completion of several AMI turnkey projects, a dynamic the company expects to continue into the first half of 2026 until newly awarded projects move into multi-year deployment phases. Backed by a proven record of disciplined execution and innovation, management remains well-positioned to capitalize on a strong pipeline of opportunities, deliver differentiated solutions and create long-term value as utilities address increasingly complex water management challenges.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -6.41% due to these changes.
VGM Scores
At this time, Badger Meter has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock has a score of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
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 downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Badger Meter has a Zacks Rank #5 (Strong Sell). We expect a below average 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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