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Badger Meter's (BMI) Q4 Earnings and Sales Lag Estimates

Badger Meter Inc. 's BMI fourth-quarter 2016 earnings per share rose 10.5% year over year to 21 cents. However, earnings fell short of the Zacks Consensus Estimate of 23 cents.

Sales in the quarter declined 2.8% to $93.1 million, falling short of the Zacks Consensus Estimate of $96 million. Lower international sales as well as persistent weakness in key flow instrumentation markets, including oil and gas, led to the sales decline.

Cost and Margins

Cost of sales decreased 2.8% year over year to $59.6 million. Gross profit in the quarter was $33.5 million, down 2.7% from $34.5 million in the prior-year quarter. Gross margin was 36%, flat from the year-ago quarter.

Badger Meter, Inc. Price, Consensus and EPS Surprise

Badger Meter, Inc. Price, Consensus and EPS Surprise | Badger Meter, Inc. Quote

Selling, engineering and administration expenses were flat year over year to $24.4 million. Operating income declined 4.4% to $9.1 million from $9.5 million in the year-earlier quarter. Consequently, operating margin contracted 10 bps to 9.8%.

Financial Position

Badger Meter reported cash and cash equivalents of $7.3 million at the end of 2016, down from $8.1 million at year-end 2015. The debt-to-total capitalization ratio was 12.9% at the end of 2016 as against 23.5% at year-end 2015.

Receivables were at $59.8 million at the end of 2016, higher than $56 million as of Dec 31, 2015. Inventories were $77.7 million at the end of 2016 compared with $79 million as of Dec 31, 2015.

2016 Performance

Badger Meter posted record earnings of $1.11 per share for 2016, which surged 23.3% year over year. Earnings missed the Zacks Consensus Estimate $1.12. Revenues for full-year 2016 increased 4.3% year over year to a record $393.8 million from $377.7 million in 2015. Revenues fell short of the Zacks Consensus Estimate of $401 million.

Outlook

Despite headwinds in material costs, Badger Meter remains optimistic about the consistent growth of new products in the municipal water market. Recovery in flow instrumentation market will drive growth in 2017. The company also stands to gain from robust fundamentals over its long-term growth strategies.

Share Price Performance

In the last one year, Badger Meter has underperformed the Zacks classified Instruments-Control sub-industry with respect to price performance. The stock gained around 22.5%, while the industry rose 38.2% over the same time frame.

Zacks Rank & Key Picks

Badger Meter currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same sector are Applied Optoelectronics, Inc. AAOI , Axcelis Technologies, Inc. ACLS and Acxiom Corporation ACXM .

Applied Optoelectronics has delivered a whopping average positive earnings surprise of 106.74% in the last four quarters. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Axcelis Technologies also boasts a Zacks Rank #1 and has delivered an impressive average positive earnings surprise of 151.25% for the trailing four quarters. Acxiom Corporation, another Zacks Rank #1 stock, has an average positive earnings surprise of 147.14% for the past four quarters.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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