NEW YORK (
-- Badger Meter
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.
Highlights from the ratings report include:
- The revenue growth significantly trails the industry average of 35.3%. Since the same quarter one year prior, revenues slightly increased by 1.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- BMI's debt-to-equity ratio is very low at 0.03 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, BMI has a quick ratio of 1.62, which demonstrates the ability of the company to cover short-term liquidity needs.
- BADGER METER INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, BADGER METER INC increased its bottom line by earning $1.91 versus $1.80 in the prior year. For the next year, the market is expecting a contraction of 10.2% in earnings ($1.72 versus $1.91).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Machinery industry. The net income has decreased by 2.4% when compared to the same quarter one year ago, dropping from $8.03 million to $7.83 million.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, BMI has underperformed the S&P 500 Index, declining 13.77% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
Badger Meter, Inc. engages in manufacturing and marketing liquid flow measurement and control technology products worldwide. Its products are used in various applications, including water, oil, and chemicals. The company has a P/E ratio of 19.1, equal to the average electronics industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Badger Meter has a market cap of $507.9 million and is part of the
industry. Shares are down 26.5% year to date as of the close of trading on Friday.
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