Itron’s ITRI stock has gained 20.6% in the past six months outperforming its sub-industry, the Zacks Computer and Technology sector and the S&P 500 composite’s growth of 3.5%, 16.1% and 15.7%, respectively.
Six-Month Price Performance Chart
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Headquartered in Liberty Lake, WA, Itron is a technology and services company and one of the leading global suppliers of a wide range of standard, advanced and smart meters and meter communication systems, including networks and communication modules, software, devices, sensors, data analytics and services to the utility and municipal sectors.
Robust top-line performance amid emerging new business opportunities is aiding the stock’s trajectory. ITRI outpaced estimates in each of the trailing four quarters, with the average surprise being 57%.
ITRI stock was down 0.9% in the last trading session and closed at $109.11. The stock is trading close to its 52-week high of $113.07, reached on Aug. 1, 2024.
Investors are now most likely contemplating whether to stay invested or cash out. Let us dive into ITRI’s prospects and determine best course of action for your portfolio.
Steady Demand Trends to Drive ITRI’s Growth
Steady market demand remains the primary growth driver for Itron. Revenues expanded 13% year over year in the last reported quarter. In addition to continued customer demand and strong operational execution, the conversion of previously constrained revenues aided the top-line growth.
Momentum in the Grid Edge Intelligence platform augurs well. The platform’s growth is being driven by various factors, including data center-related demand growth, reindustrialization and production localization, as well as electrification of transportation and homes. Itron added that automation of water infrastructure, safety applications for gas customers and the digitalization of its operations were other growth drivers. Also, the acquisition of Elpis Squared expanded the Grid Edge Intelligence platform’s solutions.
Management noted that its customers are increasingly deploying new digital technology and non-wires grid solutions. This represents a strong opportunity for ITRI.
Driven by strong business performance ITRI revised its full-year revenue outlook for 2024. Management now projects revenues to be between $2.385 billion and $2.415 billion compared with earlier guidance of $2.275 billion to $2.375 billion. Non-GAAP EPS is currently estimated in the $4.45-$4.65 band compared with $3.40-$3.80 projected in February 2024.
For the third quarter of 2024, ITRI expects revenues to be between $590 million and $600 million. Non-GAAP EPS is anticipated to be in the range of $1.10-$1.20. The Zacks Consensus Estimate for both top and bottom lines is pegged at $596.2 million and $1.13, respectively.
Strong Technical Indicators & Discounted Valuation
ITRI presents a compelling investment opportunity with its attractive forward 12-month price-to-earnings ratio of 22.97X, lower than the industry average of 24.81X observed in the last year.
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Technical indicators are also supportive of ITRI’s strong performance. The stock is trading above its 100 and 200-day moving averages, indicating upward momentum and price stability. This technical strength reflects positive market perception and confidence in its growth prospects.
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Estimate Revision Activity for ITRI
In the past 60 days, analysts have increased their earnings estimate for the current quarter by 2.7% whereas estimate for the next quarter remain unchanged. The earnings estimate for the current and the next year has been revised upward by 2.2% and 3.5%, respectively.
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ITRI’s Increasing Costs and Debt Load Are Concerns
Rising operating expenses and stiff competition amid a soft macroeconomic backdrop remain concerns. In the second quarter of 2024, non-GAAP operating expenses of $141.1 million jumped 6.6% year over year due to higher sales and general and administrative costs. These factors might exert pressure on the margins, at least in the near term.
Itron also has a leveraged balance sheet. As of June 30, 2024, the company’s cash and cash equivalents totaled $920.6 million. Long-term debt at the end of the second quarter of 2024 was $1.24 billion.
Is it a Good Time to Invest in ITRI Stock?
Increasing business pipeline activities and favorable macro trends bode well for ITRI. Though the company’s higher cost and debt load may raise eyebrows, we believe that ITRI’s focus on its core markets as well as the launch of new products will help the company to expand the available market.
Consequently, investors should add this Zacks Rank #1 (Strong Buy) stock to their watchlist. Apart from a favorable rank, ITRI has a Growth Score of B. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 or 2 (Buy) and a Growth Score of A or B offer solid investment opportunities.
Other Stocks to Consider
Some other top-ranked stocks worth consideration in the broader technology space are Workday WDAY, NetApp NTAP and BlackBerry BB. All stocks currently sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for WDAY’s 2024 EPS is pegged at $6.97, unchanged in the past seven days. Workday’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 9.1%. The stock has surged 12.2% in the past year.
The Zacks Consensus Estimate for NTAP’s fiscal 2025 earnings is pegged at $7.08 per share, unchanged in the past seven days. NTAP’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while matching in the remaining quarter, with the average surprise being 8.6%. Its shares have gained 63% in the past year.
The Zacks Consensus Estimate for BlackBerry’s fiscal 2025 EPS is pegged at a loss of 2 cents, improved from a loss of 5 cents in the past 30 days. BB’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 131.3%. Its shares have declined 32.5% in the past year.
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