Evaluating Badger Meter (BMI) Valuation After Strong Q3 Beat and Record Free Cash Flow

Badger Meter, Inc. (NYSE:BMI) is getting extra attention after announcing third quarter results that topped analyst forecasts for both profit and revenue. The company highlighted significant sales growth, improved margins, and record free cash flow.

See our latest analysis for Badger Meter.

Badger Meter’s strong quarterly beat has helped the stock regain some near-term momentum, with a 4.91% share price return over the past week and a solid 6.38% rebound in the past month, though the year-to-date share price return remains down 11.84%. Looking at the bigger picture, long-term total shareholder returns are still impressive: 71.5% over three years and 163.2% over five. This suggests the company’s mix of steady growth, resilience, and rising dividends continues to reward patient investors, even as sentiment around tech-enabled water solutions builds.

If Badger Meter’s performance has you thinking more broadly about growth stories, now is a great moment to discover fast growing stocks with high insider ownership.

But with shares rebounding and long-term growth well recognized, investors now face a key question: is Badger Meter undervalued at current levels, or is the recent strength simply the market pricing in an optimistic future?

Most Popular Narrative: 19.8% Undervalued

The most widely followed narrative values Badger Meter shares at $232.57, nearly $46 above the latest close. With investors debating whether to buy now or wait for a better entry, the underlying rationale centers on industry-leading growth drivers.

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.

Read the complete narrative.

Wondering why the fair value is so much higher than the current market price? The answer lies in bold growth assumptions and margin expansion that only insiders fully appreciate. The next move for this stock might surprise you. See what’s really driving these calculations.

Result: Fair Value of $232.57 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing cost pressures and unexpected delays in major projects could limit earnings growth. This challenges the bullish narrative around Badger Meter’s long-term potential.

Find out about the key risks to this Badger Meter narrative.

Another View: Market Multiples Tell a Different Story

Looking at Badger Meter through the lens of its price-to-earnings ratio provides a more cautious perspective. The company trades at 39.6 times earnings, noticeably higher than both the US Electronic industry average of 25.8x and its peer average of 34.3x. The fair ratio stands at 25.6x, suggesting that current investors are paying a premium for its growth story and sector leadership. This gap highlights valuation risk, especially if growth expectations are not met. Does this premium signal untapped potential, or is optimism already in the price?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Badger Meter Narrative

If you have a different perspective or want to take a hands-on approach, you can craft your own analysis in just a few minutes. Do it your way.

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Badger Meter.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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