BMI: Free Cash Flow And Buybacks Are Expected To Drive Stronger Returns

Our Badger Meter price target is unchanged at $219.50 per share, as analysts balance slightly higher risk assumptions with continued confidence in the company’s solid Q3 execution, raised gross margin framework, sustained organic growth, and supportive rating and target revisions across the Street.

Analyst Commentary

Street research remains broadly constructive on Badger Meter, with recent notes highlighting both incremental upside drivers and valuation-driven caution following the post-earnings move.

Bullish Takeaways

• Bullish analysts emphasize the company’s ability to deliver modest top line outperformance alongside 8 percent organic growth, reinforcing confidence in management’s growth execution and demand visibility.
• The increase in the gross margin framework to 39 percent to 42 percent is viewed as a structural positive that supports higher through-cycle profitability and justifies premium valuation multiples versus industrial peers.
• Strong free cash flow conversion of 136 percent and solid core incrementals signal high-quality earnings, providing support for capital deployment optionality and sustaining elevated target prices.
• JPMorgan’s Overweight initiation highlights Badger Meter as a core long term holding levered to multi decade secular tailwinds in water scarcity and aging infrastructure, underpinning confidence in durable, above GDP growth.

Bearish Takeaways

• Bearish analysts point to the recent target cuts as evidence that valuation already embeds much of the near term execution upside, limiting multiple expansion despite strong fundamentals.
• Some caution centers on elevated short interest and positioning, with recent share price weakness seen as more technical than fundamental, yet highlighting the risk of sentiment driven volatility.
• There is a view that, while Q3 was better than expected, the beat was modest and largely aligned with prior expectations for the top line, leaving limited room for further positive estimate revisions in the near term.
• Concerns remain that continued outperformance will be required to defend the current premium versus other industrial and sustainability names, particularly if macro conditions or municipal spending slow from current levels.

What's in the News

• Badger Meter, Inc. announces a new share repurchase program authorizing up to $75 million in buybacks, effective through November 30, 2028 (company buyback announcement).
• The Board of Directors authorizes a new buyback plan on November 7, 2025, reinforcing ongoing capital return to shareholders (Board buyback authorization).
• From October 1, 2025 to November 7, 2025, the company repurchases 82,448 shares, or 0.28 percent of outstanding shares, for $15 million under the February 22, 2023 program (buyback tranche update).
• From July 1, 2025 to September 30, 2025, the company reports no share repurchases under the existing authorization, indicating a pause ahead of the newly announced plan (buyback tranche update).

Valuation Changes

• Fair Value Estimate is unchanged at $219.50 per share, indicating no change in the intrinsic value assessment despite updated risk and growth inputs.
• Discount Rate has risen slightly from 8.35 percent to approximately 8.38 percent, reflecting a modest increase in perceived risk or required return.
• Revenue Growth is essentially unchanged at about 8.34 percent, signaling stable expectations for Badger Meter’s long term top line expansion.
• Net Profit Margin is effectively flat at roughly 16.54 percent, indicating no material change in long term profitability assumptions.
• Future P/E has risen slightly from 42.73x to about 42.77x, suggesting a marginally higher implied valuation multiple on forward earnings.