BADGER METER, INC. (BMI): what the price requires
At today's price, BADGER METER, INC. (BMI) is priced for +24.8% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/BMI
Headline
| Field | Value |
|---|---|
| Ticker | BMI |
| Company | BADGER METER, INC. |
| Current price | $140.25/sh |
| Composition | United States 90% / Asia 2% / Canada 2% / Europe 5% / Mexico 0% / Middle East 1% / Other 0% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 7.0% |
| Operating margin today | 19.6% |
| Margin compression implied | -12.6pp |
| Implied growth | 24.8% |
| Multiple paid | 23x operating income |
The operating-margin requirement is derived from the framework's value band at year 9, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 9.8% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7.4pp.
How unusual the bet is: elevated
| Reference | Value |
|---|---|
| vs own history | +0.87σ |
| cohort percentile (of 177 peers) | 41 |
| sustained it ~5 years at this level | 31% |
| implied end-window share | 0% |
Valuation X-Ray
Every valuation family lands below the price. The price therefore requires assumptions beyond what those standard frames encode.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 2.90x | 5 | expensive |
| Earnings | 2.93x | 5 | expensive |
| Relative | 1.81x | 3 | expensive |
| Growth | 1.26x | 3 | expensive |
Families that call it expensive: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.3%); the inversion above states its own rate.
Per-Model Detail (n=16)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $111.30 | 1.26x | yes | FCF base $0.2B, growth 4% (input: historical growth), terminal g 3.8%, WACC 9.3%, 5yr projection |
| DCF Exit Multiple | Growth | $129.01 | 1.09x | yes | Exit EV/EBITDA: 20.8x / 22.8x / 24.8x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $98.95 | 1.42x | yes | P/E 22.06x (blended: static sector reference 18x + trailing (TTM) 32x), scenarios: 18.6x / 22.1x / 25.5x (bear / base = reference held flat / bull), EV/EBITDA 15.23x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $48.07 | 2.92x | yes | BV/sh $23.51, ROE (TTM) 18.9%, ke 9.3% |
| Two-Stage Excess Return | Asset | $67.92 | 2.06x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $102.88 | 1.36x | yes | Rev $0.9B, growth 4% (input: historical growth; tapered), Terminal P/S: 3.9x / 4.7x / 5.4x (bear / base = today's held flat / bull, cap 8x) |
| Growth-Adjusted P/E | Relative | — | — | no | — |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $42.60 | 3.29x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.13B × (1−25%) / WACC 9.3% → EPV (no growth) |
| Residual Income | Asset | $66.70 | 2.10x | yes | BV $23.51 + 5yr PV of (ROE (TTM) 18.9% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $48.41 | 2.90x | yes | √(22.5 × EPS $4.43 × BVPS $23.51) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $77.28 | 1.81x | yes | EBITDA $0.17B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $69.24 | 2.03x | yes | FCF $169.1M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $65.73 | 2.13x | yes | SBC-adj FCF $0.16B (FCF $0.17B − SBC $0.01B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $23.77 | 5.90x | yes | EPS $4.43 × (8.5 + 2×-1.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $13.87 | 10.11x | yes | BV $23.51 × (ROIC 5.5% / WACC 9.3%) |
| P/Sales Sector | Relative | $75.20 | 1.87x | yes | Revenue $0.88B × sector P/S 2.5x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | $47.89 | 2.93x | yes | EPS $4.43 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $0 |
| Net debt / NOPAT (after-tax) | 0.00x |
| Net debt / operating income (pre-tax) | 0.00x |
| Share count CAGR (dilution) | 0.0% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
Badger Meter runs a debt-free balance sheet. Gross debt is zero, net cash is about $205 million, and the company earns an 18.9% return on equity. That fortress funding is the cleanest part of the story.
The price is the demanding part. At about $135 the market pays roughly 22 times operating income, which implies operating profit growing about 24.5% a year for five years. Only the growth-DCF reaches the price; the asset, earnings-power, and peer-multiple frames all read the stock as richly valued.
The near-term tension is real. First-quarter 2026 revenue fell 9% as utility-water project timing slipped and municipal ordering softened, and the implied growth rate is far above the 5% the business has recently delivered. The bet is on durable smart-water compounding the static models cannot see.
Bull Case
Lead with the balance sheet, because it tells you how management thinks. Badger Meter carries zero gross debt and about $205 million of net cash, which is roughly 1.2 times trailing operating income sitting idle on the asset side. A company that funds its growth and its acquisitions entirely from its own cash flow, while still paying a dividend, is signaling that it does not need leverage to compound. That is the posture of a management team confident in the durability of its business rather than one stretching to hit a number. The 18.9% return on equity, earned without any debt amplification, is the proof: this is real operating profitability, not financial engineering.
The business itself is a quiet compounder in an essential category. Badger Meter sells smart water meters and the software that sits on top of them, and the recurring, higher-margin layer is growing even when hardware is not. In the most recent quarter, SaaS, SmartCover, water quality, and network monitoring all performed well and partially offset a decline in utility-water hardware. The strategic moves reinforce the software tilt: the SmartCover acquisition in early 2025 added sewer and lift-station monitoring with roughly $59.6 million of developed-technology intangible value, and the company has since acquired UDlive, a UK sewer-line monitoring provider, folding both into its BlueEdge water-management suite. The cash balance is what funds this roll-up without dilution.
The forward case is mix and recurrence. Management expects awarded projects to drive sequential revenue improvement and a stronger run-rate exiting 2026. If the recurring software base keeps growing while the lumpy hardware projects recover, the blended margin and growth profile improves structurally, not cyclically. The price assumes durable compounding the static valuation frames cannot capture, and a debt-free balance sheet with a growing recurring-revenue layer is exactly the kind of business that can, over time, justify a premium the asset models will always undershoot.
Bear Case
The variable with the most leverage on this thesis is one Badger Meter does not control: municipal water budgets. The company sells primarily to utility and municipal customers, and those buyers spend on the rhythm of their own capital cycles, grant funding, and project timing, not on Badger Meter's growth ambitions. The first quarter of 2026 made the exposure plain. Revenue fell 9% to $202.3 million, EPS dropped to $0.93 from $1.30, and operating margin contracted to 17.4% from 22.2%, all driven by the timing of utility water projects and slower short-cycle municipal ordering. A miss of that size, against a consensus near $1.20, is not a rounding error; it is the demand side reminding the market that this is a project-pacing business.
That matters enormously because of what the price assumes. At about 22 times operating income, the inversion reads the stock as embedding roughly 24.5% annual operating-profit growth for five years. The company has recently grown closer to 5%, and history is unkind to the assumption: only about 31% of comparable fast-growers sustained that pace for five years. The priced-in label is elevated, above what the fundamentals comfortably support. When a stock priced for 24% growth prints a 9% revenue decline, the gap between expectation and reality is the risk, and a single soft quarter can compress both the earnings and the multiple at once.
The valuation frames underline the stretch. Every static method lands well below the price: Simple Excess Return at $48, Earnings Power Value at $43, the Graham Number at $48, Relative Valuation at $98, and FCF Yield at $69. The blended X-ray is about $98, more than a quarter below the price. Only the DCF models, which require the growth assumption to hold, reach the price at all. The pristine balance sheet protects the downside in a way most industrials cannot match, so this is not a solvency risk. It is an expectations risk: a high-quality, debt-free business priced as if its lumpy municipal demand were a smooth growth curve.
Valuation
Badger Meter is priced as a whole company on its operating earnings, and on that basis the price is demanding. At about $135 (June 27, 2026) the market pays roughly 22 times company-wide operating income, which inverts to operating-profit growth of about 24.5% per year for five years at a 9.9% cost of capital. Each percentage point of cost of capital moves that implied growth rate by about 7.3 points, so the assumption is sensitive, but the central read is clear: the price embeds a pace far above the roughly 5% the business has recently delivered.
The four families disagree sharply, and the disagreement is the message. The asset frame sits far below the price: Simple Excess Return at about $48 on a $23.51 book value and an 18.9% return on equity, Two-Stage Excess Return at $68, Residual Income at $67. The earnings-power frame is just as conservative: Earnings Power Value at $43, FCF Yield at $69, SBC-adjusted FCF Yield at $66, Earnings Yield at $48. The peer-multiple frame lands near $98 on a blended price-to-earnings around 22 times. Only the growth-DCF family reaches the price, with DCF Perpetual Growth at $123 and DCF Exit Multiple at $132. The blended X-ray sits near $98. When asset, earnings-power, and peer methods all cluster below the price and only the growth-DCF reaches it, the price is paying for durable compounding the static frames structurally cannot see.
So the bet is narrow and explicit. The buyer is underwriting a moat-and-durability premium: that Badger Meter's smart-water and software franchise compounds faster and longer than its recent record or its asset base would suggest. The debt-free balance sheet, $205 million of net cash and zero leverage, removes financial risk entirely from the equation, so the entire question is operating: whether the recurring-revenue mix and project recovery can deliver growth the static models refuse to credit.
Catalysts
First-quarter 2026 results, reported in April, were the recent driver and they disappointed. Revenue fell 9% to $202.3 million, diluted EPS dropped to $0.93 from $1.30, and operating margin contracted to 17.4% from 22.2%, well short of a consensus near $1.20. Management attributed the decline to the timing of utility water projects and slower short-cycle municipal ordering, partially offset by SaaS, SmartCover, water quality, and network monitoring. The key near-term marker is whether awarded projects convert into the sequential revenue improvement and stronger exit run-rate management is guiding toward, with full-year revenue excluding acquisitions expected to be roughly flat versus 2025.
The acquisition cadence is the standing growth lever. The SmartCover deal closed in January 2025, adding sewer and lift-station monitoring and about $59.6 million of developed-technology intangible value, and the company has since acquired UDlive, a UK sewer-line monitoring provider, integrating both into its BlueEdge water-management suite. The net-cash balance funds further bolt-ons without dilution.
The watch items are utility and municipal order pacing, the recovery of awarded projects into shipped revenue, the growth of the recurring SaaS and monitoring base against the lumpy hardware line, and operating-margin recovery from the depressed first-quarter level. Sources: Badger Meter Q1 2026 press release and 8-K and 10-Q (businesswire.com, sec.gov, stocktitan.net), earnings coverage and call transcript (investing.com, tradingview.com, fool.com).
Peer Cohorts (Per Segment, With Filing Citations)
Badger Meter (flow measurement) (reported)
- ITRI (Itron, Inc.)
- (no filing in the citation store)
- VLTO (VERALTO CORPORATION)
- (no filing in the citation store)
- VNT (Vontier Corporation)
- (no filing in the citation store)
- FTV (Fortive Corp)
- (no filing in the citation store)
- MIR (Mirion Technologies, Inc.)
- (no filing in the citation store)
- ST (SENSATA TECHNOLOGIES HOLDING PLC)
- (no filing in the citation store)
- TRMB (TRIMBLE INC.)
- (no filing in the citation store)
- ONTO (ONTO INNOVATION INC.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.