NEW YORK (TheStreet) -- Badger Meter (NYSE:BMI) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share and expanding profit margins. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 4.5%. Since the same quarter one year prior, revenues rose by 32.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electronic Equipment, Instruments & Components industry. The net income increased by 91.7% when compared to the same quarter one year prior, rising from $3.26 million to $6.25 million.
- BADGER METER INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BADGER METER INC reported lower earnings of $1.28 versus $1.91 in the prior year. This year, the market expects an improvement in earnings ($1.60 versus $1.28).
- The current debt-to-equity ratio, 0.38, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that BMI's debt-to-equity ratio is low, the quick ratio, which is currently 0.60, displays a potential problem in covering short-term cash needs.
- 37.90% is the gross profit margin for BADGER METER INC which we consider to be strong. Regardless of BMI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BMI's net profit margin of 8.20% compares favorably to the industry average.
-- Written by a member of TheStreet RatingsStaff
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