We came across a bullish thesis on Badger Meter, Inc. on Max Dividends’s Substack by Serhio MaxDividends and Max Dividends. In this article, we will summarize the bulls’ thesis on BMI. Badger Meter, Inc.'s share was trading at $179.23 as of October 8th. BMI’s trailing and forward P/E were 39.16 and 34.13 respectively according to Yahoo Finance. 30 Funny debate topics like Is Water Wet Pixabay/Public domain Badger Meter (BMI) represents a rare combination of stability, growth, and reliable income, making ...

Core Viewpoint - Badger Meter, Inc. (BMI) has shown a strong stock performance with a year-to-date gain of 14.9%, outperforming the S&P 500 and the Instruments-Control industry [1][2] Group 1: Positive Long-Term Outlook - Increasing demand for digital smart water solutions is driven by regulatory pressures, aging infrastructure, and climate-related challenges [3] - Macroeconomic factors such as replacement-driven demand and the rise of Advanced Metering Infrastructure (AMI) adoption are additional growth drivers [3] - BMI is experiencing strong demand for its products, including mechanical and E-Series Ultrasonic meters, ORION Cellular endpoints, and BEACON Software-as-a-Service revenues [4] Group 2: Strategic Acquisitions - BMI's acquisition of SmartCover Systems for $185 million enhances its monitoring solutions and expands its BlueEdge suite [7] - SmartCover contributes $35 million in annual revenues and provides technology that helps utilities monitor sewer levels, reducing costs and protecting public health [8] - The acquisition has already generated $6 million in revenue contribution within months [9] Group 3: Financial Performance - BMI reported a record quarterly free cash flow of $30 million, a 60% increase year over year, supported by improved earnings and effective working capital management [10] - As of March 31, 2025, the company had $131.4 million in cash and cash equivalents, indicating a strong cash position [10] Group 4: Challenges Ahead - Rising expenses and intense competition pose challenges, with ongoing tariff uncertainties expected to impact U.S. manufacturing operations [11] - Tariffs on electronics and components may lead to higher input costs, necessitating selective price increases [12] - The first quarter of 2025 saw SEA expenses rise to $46 million, primarily due to the incorporation of SmartCover [13] Group 5: Market Position and Valuation - BMI's stock is trading at a forward price/earnings ratio of 48.48X, significantly higher than the industry's 18.96X, reflecting its long-term growth potential [16] - Analysts have revised earnings estimates downward by 0.9% for the current quarter, indicating some caution in the market [17] Group 6: Investment Strategy - The company's strong position in the smart water solutions market and strategic acquisitions provide a competitive edge [18] - While the valuation is high and short-term cost pressures exist, robust free cash flow and a solid balance sheet offer financial flexibility [18] - New investors are advised to wait for a better entry point, while existing investors should retain their holdings [19]