2024-03-20 12:30:16 ET
Summary
- Badger Meter is benefiting from the adoption of advanced technologies and an infrastructure spending boom.
- The adoption of smart water technologies is beginning to mature though, meaning growth tailwinds are likely to wane in coming years.
- Current infrastructure spending is also not sustainable, which will likely contribute to a normalization in sales at some point.
- Badger Meter still has an elevated backlog though, ensuring that near-term results should remain robust.
Badger Meter, Inc. ( BMI ), a provider of water monitoring solutions, is benefitting from the adoption of more advanced technologies and an infrastructure spending boom. While growth is currently strong, and the company's margins improving, current strength does not appear to be sustainable. Badger Meter's backlog should ensure robust growth in the near term, but a normalization of sales will eventually come. Given this situation, I don't believe it makes sense to pay an exorbitantly high multiple for Badger Meter's stock, despite the quality of the business.
market
There are a number of secular trends supporting Badger Meter's business, including:
- Labor shortages.
- Aging infrastructure.
- Regulations.
- Water conservation.
Read the full article on Seeking Alpha
For further details see:
Badger Meter: Beware The Backlog