NEW YORK ( TheStreet) -- Badger Meter (NYSE: BMI) 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, expanding profit margins and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and disappointing return on equity.
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- The revenue growth came in higher than the industry average of 3.5%. Since the same quarter one year prior, revenues slightly increased by 9.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- 36.80% 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 9.10% compares favorably to the industry average.
- BADGER METER INC reported flat earnings per share in the most recent quarter. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse 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 ($1.77 versus $1.28).
- Despite currently having a low debt-to-equity ratio of 0.49, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that BMI's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.54 is low and demonstrates weak liquidity.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market on the basis of return on equity, BADGER METER INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
-- Written by a member of TheStreet Ratings Staff