Last Update 04 Dec 25

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.

Strong demand for advanced water solutions and innovative IoT-enabled products supports higher-margin growth and strengthens Badger Meter's leadership in digital water infrastructure.
Acquisitions and ongoing investments drive new revenue streams and operational efficiencies, providing resilience against market fluctuations and ensuring sustained long-term profitability.
Exposure to macroeconomic, regulatory, and competitive pressures could create revenue volatility, margin compression, and uncertainty for future growth and profitability.

Catalysts

About Badger Meter

Manufactures and markets flow measurement, quality, control, and communication solutions worldwide.What are the underlying business or industry changes driving this perspective?

The increasing emphasis on water conservation and sustainable infrastructure is driving elevated demand from utilities for advanced metering and monitoring solutions; Badger Meter's continued success with its BEACON SaaS platform, BlueEdge suite, and recent SmartCover acquisition positions the company to capture a larger share of this growing market, supporting high single-digit revenue growth targets over the long run.
The rapid expansion and integration of IoT-enabled products and real-time analytics, as seen in the rollout of BEACON and new machine-learning-enabled products like Cobalt, are accelerating customer adoption of recurring, higher-margin software and data solutions-contributing to improved revenue visibility and ongoing net margin enhancement.
Anticipated operational synergies and commercial opportunities from the SmartCover acquisition and other organic investments are expected to drive outsized top-line and EPS growth as Badger Meter leverages its established customer network to cross-sell new offerings while improving cost leverage, especially in SG&A over time.
Continued technology innovation and differentiation in ultrasonic metering and beyond the meter water management solutions enhance Badger Meter's competitive standing, enabling premium pricing and structural gross margin expansion, even as the industry transitions to digital infrastructure.
Persistent government investment and regulatory mandates for water infrastructure upgrades, coupled with the mission-critical nature of Badger Meter's solutions for utility revenue integrity (meter as the cash register), are likely to support robust long-term demand, buffering cyclical risks and underlining long-term revenue and cash flow stability.

Badger Meter Earnings and Revenue Growth

Badger Meter Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Badger Meter's revenue will grow by 8.5% annually over the next 3 years.
Analysts assume that profit margins will increase from 15.5% today to 16.3% in 3 years time.
Analysts expect earnings to reach $182.2 million (and earnings per share of $6.13) by about September 2028, up from $135.7 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 47.8x on those 2028 earnings, up from 39.0x today. This future PE is greater than the current PE for the US Electronic industry at 23.9x.
Analysts expect the number of shares outstanding to grow by 0.2% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.14%, as per the Simply Wall St company report.

Badger Meter Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Ongoing macroeconomic and trade policy uncertainty, including fluid and potentially escalating tariff environments (such as tariffs on copper and other commodities), introduces unpredictability in input costs and supply chain management, which could negatively impact gross margins and earnings if price increases cannot fully offset rising expenses.
Continued reliance on large municipal AMI (Advanced Metering Infrastructure) projects exposes the company to lumpy, uneven revenue streams and elongated procurement cycles; delays or pauses in project rollouts could create quarter-to-quarter revenue volatility, limiting revenue predictability and potentially impacting earnings stability.
Higher SG&A expenses, fueled by acquisitions (like SmartCover) and ongoing investments in personnel and software development to support growth, risk outpacing revenue growth in the long term, putting sustained pressure on net margins if sales leverage does not materialize as expected.
Intensifying competition-including from larger diversified industrials and new technology entrants-could force greater R&D spending and pricing concessions, eroding Badger Meter's pricing power and market share, thus impacting long-term revenues and profitability.
Potential reductions in federal or state funding for municipal water infrastructure projects (e.g., EPA budget cuts or decreased access to state revolving funds), especially in North America, could result in decreased overall spending by key customers, limiting addressable market growth, slowing order flow, and constraining future revenue expansion.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $237.429 for Badger Meter based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $264.0, and the most bearish reporting a price target of just $219.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.1 billion, earnings will come to $182.2 million, and it would be trading on a PE ratio of 47.8x, assuming you use a discount rate of 8.1%.
Given the current share price of $179.44, the analyst price target of $237.43 is 24.4% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

BMI: Consistent Margin Expansion And Cash Flow Will Drive Long-Term Gains