So here's what happens when a water technology company has a leaky quarter. Badger Meter Inc (BMI) shares tanked 20% on Friday, hitting a fresh 52-week low, after the company reported first-quarter results that missed the mark on both revenue and earnings. The culprit, according to the company? Not a drought in demand, but just some unfortunate timing.
Sales dropped 9% year-over-year to $202.3 million. Diluted earnings per share fell to 93 cents from $1.30 a year ago. Both numbers came in below what analysts were expecting. Operating earnings declined to $35.2 million, and the operating margin contracted to 17.4% from 22.2%. Digging into the segments, utility water sales were down 10%, and flow instrumentation sales declined 4%.
The company ended the quarter with $205.45 million in cash and equivalents and generated $33.89 million in operating cash flow. So, the balance sheet isn't the problem. The story from management is that this is all about "project timing variability" and "softer short-cycle municipal demand." In other words, customers just pushed some orders back. They're quick to point to a "strong pipeline of awarded projects" expected to ramp up in the second half of 2026.
Buying Growth While the Stock Sinks
In a separate move, perhaps to give investors something else to think about, Badger Meter also announced it's buying UK-based UDlive for $100 million plus some potential extra payments. The deal is expected to close by the end of April.
UDlive is in the sewer line monitoring business, which fits with Badger Meter's existing BlueEdge platform. The target company reported $22 million in revenue for its fiscal 2026 and was operating profitably, with a 90% success rate on tenders. Badger Meter's plan is to use its own global footprint to scale UDlive's business beyond the UK.
What the Boss Says
CEO Kenneth C. Bockhorst tried to put a positive spin on a rough quarter. "Our first quarter results were consistent with that expectation," he said, though it's not entirely clear what expectation he's referring to given the market's reaction.
"In our view, the year-over-year decline in revenue and associated operating leverage are related to variability in project timing and short-cycle customer order patterns and do not reflect a change in underlying demand, our competitive position, or the long-term market drivers for our business," Bockhorst explained.
He doubled down on the future, adding, "We have a strong pipeline of awarded projects scheduled to launch in the second half of 2026, and our broader multi-year opportunity funnel remains robust." The market, for now, seems more focused on the weak present than the promised robust future.
Charts Don't Look Great
From a technical perspective, the picture is pretty bearish. The stock is trading way below its 52-week high of $256.08 and is hovering near its low of $139.14. It's also trading 17.1% below its 20-day simple moving average and 16.7% below its 50-day average, which suggests it's struggling to find any short-term momentum.
What the Analysts Think
Despite the ugly price action, the analyst community hasn't thrown in the towel. The stock still carries a consensus Buy rating with an average price target of $195.00. That's a hefty premium to where it's trading now.
Recent moves have been mixed but generally supportive. Stifel maintained a Buy rating and raised its price target to $174 on April 14. Baird upgraded the stock to Outperform and raised its target to $173 on March 30. On the more cautious side, Argus Research downgraded Badger Meter to a Hold rating back on February 2.
A Mixed Bag of Fundamentals
Looking at the company's fundamental profile reveals a split personality. On one hand, its growth score is strong at 78.77, suggesting solid potential in its market. Its quality score is a neutral 55.68, indicating a still-healthy balance sheet.
On the other hand, its value score is weak at 43.14, meaning it trades at a steep premium compared to peers. And its momentum score is abysmal at 9.94, which makes sense for a stock that's down 20% in a day and underperforming the broader market. The verdict? A company with good long-term prospects but terrible short-term price action.
At the time of publication, Badger Meter (BMI) shares were down 20.30% at $121.37.
