Itron, Inc. (ITRI): what the price assumes

In the published model solve dated 2026-Q2, anchored at $97.53, Itron, Inc. (ITRI) is priced for +5.5% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-24.

Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/ITRI

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 8.3% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

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.

Families that justify the price: Growth Families that call it expensive: Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.8%); the inversion above states its own rate.

Per-Model Detail (n=15)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

• Close to two years of work is already contracted: total backlog stood at $4.4 billion at the end of March against an annual revenue outlook of $2.35 billion to $2.45 billion.

• The concentration of risk is in one line, networked solutions, which produced $351 million of first-quarter revenue and shrank 13% year over year, while total backlog came down from $4.7 billion twelve months earlier.

• Second-quarter results are due on July 28, 2026, with management guiding revenue of $560 million to $570 million, a step down from the $587 million just reported.

Bull Case

Electricity demand is arriving faster than anyone can build for it. Data centres want load in eighteen months; a new transmission line takes a decade, and a new plant is not much quicker. That leaves utilities with one practical option, which is to find capacity inside the wires they already own. Doing that requires knowing, at the level of an individual transformer and an individual meter, what the network is actually doing minute by minute, and then acting on it. Metering, the network that carries the readings, and the software that turns them into decisions is exactly the stack Itron sells.

The evidence that the mix is moving toward the higher-value end of that stack is in the segment lines. Outcomes, the software and managed-services business, grew 22% to $96 million in the first quarter, and a new resiliency solutions segment contributed $16 million from the Urbint and Locusview acquisitions. Adjusted gross margin reached 40.7%, up 490 basis points on the prior year. Revenue fell 3% over the same span and adjusted EBITDA still rose 5% to $92 million. A business whose profit rises while its top line falls is changing what it sells, not merely cutting.

That shift has already done something remarkable to the earnings base. Trailing operating income now runs $302.0 million on roughly $2.35 billion of revenue, a 12.7% operating margin. Average the last five years and the figure is about half that, because the early part of the window covers a period when components were scarce, deliveries slipped and the company earned almost nothing. Any method that normalises across those five years is valuing a company that no longer exists. The one that values what exists today sees a different business entirely.

The order book is the reason this is more than a margin story. Bookings ran $476 million in the quarter and total backlog closed at $4.4 billion, close to two years of revenue already contracted, in an industry where a utility deployment signed today gets installed over three to five years and generates service revenue for a decade after. The revenue timing is lumpy because deployments are lumpy, and the full-year outlook of $2.35 billion to $2.45 billion is explicitly weighted to the back half on large network rollouts. Lumpy is not the same as shrinking.

Capital structure is the quiet advantage. Borrowings are entirely convertible notes: $805 million at zero interest maturing in 2032 and $805 million at 1.375% maturing in 2030, against $713 million of cash at the end of March. That is roughly $1.6 billion of financing on which the company pays almost nothing, which is why operating income covers the interest bill about 13.3 times over despite net borrowings running near 3.0 times a year of operating profit. Free cash flow of $79 million in the quarter, with $100 million already spent on repurchases in February, says the cash is being used rather than accumulated.

Set against all that, what today's quote demands is modest. The price implies operating profit growing about 0.7% a year. Over its recent record the company's operating profit has compounded at an average near 18.4% annually. The gap between those two figures is the bull case stated in one line.

Bear Case

A low bar is still a bar, and the direction of travel matters more than the height. Today's price implies operating profit growing about 0.7% a year, which sounds like nothing. Then look at what is actually happening to the business generating that profit. First-quarter revenue fell 3% to $587 million, and networked solutions, the largest single line, fell 13% to $351 million. Device solutions fell 1%. Total backlog closed at $4.4 billion against $4.7 billion a year earlier. Second-quarter guidance calls for $560 million to $570 million, another step down. Growing operating profit at any positive rate requires the shrinkage to stop.

The margin story cuts both ways, and this is the part a holder should sit with. Adjusted gross margin of 40.7% is up 490 basis points on the prior year. Trailing operating income of $302.0 million against a five-year average near half that level is not evidence of a new normal; it is evidence of an unusually good year following unusually bad ones. Component costs normalised, backlog priced during scarcity got delivered, and mix moved toward software. Each of those is a level shift that happens once. If the current margin is the peak rather than the base, then the earnings the price is capitalising are the wrong earnings, and the modest growth requirement gets applied to a number that falls first.

Where the standard frames land supports that reading. The price sits about 1.25 times where the earnings-power methods land and about 1.20 times what the book-value methods reach. Only peer multiples, at 0.73 times, and the cash-flow methods that credit growth, at 0.92 times, get above the quote. The frames that simply capitalise what the company earns now put it below today's price; the frames that assume the business keeps growing put it above. That is the whole disagreement, and it is a disagreement about whether the recent improvement persists.

Customer concentration is structural and does not go away. Itron sells to regulated utilities, and a regulated utility spends what a rate case allows it to spend. Deployment schedules move when a commission takes longer, when a tariff changes the landed cost of hardware, or when a utility decides the money is better spent on wildfire mitigation this year. The record backlog is real, but backlog is a schedule, not a receipt, and the company has already described project timing as the swing factor in its own results.

The balance sheet is cheap rather than strong. The $1.6 billion of borrowings are convertible notes, which is another way of saying the company sold call options on its own equity to get a zero and a 1.375% coupon. Cash came down roughly $300 million from year-end, absorbing the Locusview purchase, a $460 million repayment of older converts and $100 million of buybacks against $79 million of free cash flow generated. Net borrowings of $897.1 million now sit at about 3.0 times a year of operating profit. That is manageable while operating profit stays near a record. It is less manageable if the peak-earnings reading turns out to be the right one, and the share count, essentially flat over the past four years despite repurchases, shows the converts quietly working against the buyback.

Valuation

Start with what is being asked of the business rather than what it is worth. At $84.58, the enterprise is valued around 15.5 times a year of operating profit, and the price implies that profit growing roughly 0.7% a year. Measured against the pace this company has recently delivered, that is undemanding, and the assumption sits comfortably inside the range of what comparable industrials achieve. The interesting question is not whether 0.7% is achievable. It is whether the profit base it is applied to is the right one.

That base is unusual. Trailing operating income of $302.0 million represents a 12.7% operating margin, roughly double the five-year average, and the improvement is recent and specific: adjusted gross margin rose 490 basis points year over year in the first quarter on better mix and normalised component costs. Methods that average five years therefore value a company that spent the first half of the window barely profitable, and one such method lands so far below the price that it distorts its own family. Reading it literally would be reading the supply-chain crisis as Itron's steady state.

The families split cleanly along that fault line. Capitalise today's earnings with no growth and the price sits about 1.25 times where those methods land; value the equity on book plus profitability and the price sits about 1.20 times what those methods reach. Peer multiples land above the quote, at 0.73 times, and so do the cash-flow methods that credit forward growth, at 0.92 times. So the static lenses call this fully priced and the forward lenses call it cheap, which is the signature of a company whose recent results look nothing like its recent history. Neither camp is being unreasonable; they are answering different questions about the same margin.

The contracted book is what makes the forward reading defensible rather than hopeful. Backlog stood at $4.4 billion at the end of March with $476 million of new bookings in the quarter, against a full-year revenue outlook of $2.35 billion to $2.45 billion weighted to the second half on large network deployments. Roughly two years of revenue is already under contract. Against that, the same backlog was $4.7 billion a year earlier, so the book is being drawn down faster than it is being replaced.

Solvency neither rescues nor threatens the case. Cash of $713 million sat against $1.61 billion of convertible notes at the end of March, all of it issued at a zero or 1.375% coupon, leaving net borrowings of $897.1 million at about 3.0 times a year of operating profit with interest covered roughly 13.3 times over. The cost of that debt is close to nothing in cash terms, which is why the coverage looks so comfortable, and the real consideration is the conversion feature rather than the interest. Free cash flow of $79 million in the quarter funds the business without recourse to markets. The decisive number remains the one on the order book, because everything the forward methods credit runs through it.

Catalysts

July 28, 2026 is the date. Second-quarter results are due that morning, and management has already guided to revenue of $560 million to $570 million with non-GAAP diluted earnings of $1.25 to $1.35 a share, both below the year-ago quarter at the midpoint. The guided decline is known. What is not known is the bookings figure, which ran $476 million in the first quarter, and the backlog, which closed at $4.4 billion against $4.7 billion a year earlier. A backlog that stabilises would say the drawdown is a deployment-timing effect. A second consecutive decline would say demand has moved.

The full-year shape is the second thing to watch, because it is unusually loaded. The 2026 outlook of $2.35 billion to $2.45 billion is explicitly weighted to the back half on large network rollouts. That leaves the entire year riding on deployments that have to start on schedule. Utilities do not deploy on a company's fiscal calendar, and project timing has already been named by management as the main swing factor in the results delivered so far.

The segment to watch inside the print is Outcomes, which grew 22% to $96 million in the first quarter, together with the new resiliency solutions line that contributed $16 million from the Urbint and Locusview acquisitions. Those two carry the higher margins and the recurring revenue, and the gross margin expansion of 490 basis points depends on them continuing to take share of the mix. If hardware keeps falling and software keeps rising, the earnings base holds even on a lower revenue line. If both fall together, the margin story loses its engine.

Peer Cohorts (Per Segment, With Filing Citations)

Device Solutions (reported)

• BMI (BADGER METER, INC.)
• FY2025 10-K: …of radio endpoints, along with remote telemetry units, providing customers with a choice of industry-leading options for communicating data from hardware into use-specific software applications. The Company's hardware-enabled software solutions provide insights and analytics critical to the holistic management of our…
• FY2025 10-K: …management, sewer line and lift station monitoring solutions, we are able to meet these needs and enhance the scope of actionable data for customers to measure, conserve and protect water. Our BlueEdge tailorable smart water solutions provide actionable information through data analytics derived from an…
• VNT (Vontier Corporation)
• FY2025 10-K: …operations for our customers' site covering forecourts, stores and other on-site services including quick service restaurants, car washes and EV charging. We have a large installed customer base with point-of-sale and self-checkout technology, payment processing and workflow software, payment terminals, site…
• FY2025 10-K: …to VBS drives long-term shareholder value by fueling customer satisfaction, profitability and strategic growth through innovation and disciplined acquisitions. Leveraging VBS, we are accelerating our Connected Mobility strategy, advancing a smart, interconnected mobility ecosystem across our segments. Segments The…
• MIR (Mirion Technologies, Inc.)
• FY2025 10-K: …needs and requirements. Cross pollination of technologies between end markets also drives new growth opportunities as we leverage our Medical distribution channels to market and sell Nuclear & Safety products. In our Nuclear & Safety segment, supporting the development of small modular nuclear reactors (SMRs)…
• FY2025 10-K: …adopted ASU 2023-07 "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" as of the year ended December 31, 2024, and applied the requirements of the standard to prior period information retrospectively as required. Description of Segments The Medical segment provides solutions focused on…

Networked Solutions / Outcomes / Resiliency Solutions (reported)

• BMI (BADGER METER, INC.)
• FY2025 10-K: …of radio endpoints, along with remote telemetry units, providing customers with a choice of industry-leading options for communicating data from hardware into use-specific software applications. The Company's hardware-enabled software solutions provide insights and analytics critical to the holistic management of our…
• FY2025 10-K: …fluids and are known for accuracy, long-lasting durability and for providing valuable and timely flow measurement data. • water quality monitoring solutions, including optical sensing and electrochemical instruments that provide real-time, on-demand data parameters. • high frequency pressure and acoustic leak…
• VNT (Vontier Corporation)
• FY2025 10-K: …operations for our customers' site covering forecourts, stores and other on-site services including quick service restaurants, car washes and EV charging. We have a large installed customer base with point-of-sale and self-checkout technology, payment processing and workflow software, payment terminals, site…
• FY2025 10-K: …to VBS drives long-term shareholder value by fueling customer satisfaction, profitability and strategic growth through innovation and disciplined acquisitions. Leveraging VBS, we are accelerating our Connected Mobility strategy, advancing a smart, interconnected mobility ecosystem across our segments. Segments The…
• TRMB (TRIMBLE INC.)
• FY2025 10-K: …utilities, and transportation. We exist to empower our customers: asset owners; general and specialty contractors; architects, engineers, and designers; surveyors; energy and utility companies; transportation shippers and carriers; as well as state, federal, and municipal governments. Productivity and sustainability…
• FY2025 10-K: …growth, profitability, and market leadership. We serve multi-trillion-dollar global industries that operate in demanding environments with technology adoption in the earlier phases relative to other industries. With the growth in mobile and cloud computing capabilities, increasing technological know-how of end users,…
• ROK (Rockwell Automation, Inc.)
• FY2025 10-K: …support many production disciplines, including discrete, process, batch, safety, security, motion, robotics, and power control, in a single hardware and software environment, helping customers increase the speed of deployment and reduce their total cost of ownership. Our open architecture and strong partner ecosystem…
• FY2025 10-K: …our product, solution and services portfolio, technology differentiation, industry and application expertise, installed base, partner ecosystem, global presence and price. Major competitors include Siemens AG, ABB Ltd, Schneider Electric SA, Emerson Electric Co., Mitsubishi Electric Corp., Honeywell International…
• FTV (Fortive Corp)
• FY2025 10-K: …Our Intelligent Operating Solutions segment provides advanced instrumentation, software and services to tens of thousands of customers enabling their mission-critical workflows. These offerings include professional instruments used in applications including maintenance, repair, measurement and condition monitoring,…
• FY2025 10-K: -based software contracts, and service and support contracts, which we expect to fulfill approximately 75 percent within the next two years , approximately 90 percent within the next three years , and substantially all within four years . Disaggregation of Revenue We disaggregate revenue from contracts with customers…
• ST (SENSATA TECHNOLOGIES HOLDING PLC)
• FY2025 10-K: …customers' products and solutions can act upon. Our electrical protection portfolio (which includes both components and systems) is composed of various switches, fuses, inverters, energy storage systems, high-voltage distribution units, controllers, and software, and includes high-voltage contactors and other…
• FY2025 10-K: …but not limited to, the risks and uncertainties described in Item 1A: Risk Factors included elsewhere in this Report. Our actual results may differ materially from those contained in or implied by any forward-looking statements. Overview We innovate on behalf of our broad array of customers, solving some of their…
• MKSI (MKS INC)
• FY2025 10-K: 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the SEC. Markets and Applications Since our inception, we have focused on satisfying the needs of our customers by establishing…
• FY2025 10-K: …guidance and control for manufacturing processes. In connection with the Atotech Acquisition (as defined below), we introduced an extension of the Surround the Workpiece offering called Optimize the Interconnect®, which refers to MKS' combined laser drilling and chemistry solutions geared towards accelerating…
• ONTO (ONTO INNOVATION INC.)
• FY2025 10-K: …wafers to improve device performance and manufacturing yields. Our end customers manufacture many types of ICs for a multitude of applications, each having unique manufacturing challenges. This includes ICs to enable information processing and management (logic ICs), memory storage (NAND, 3D-NAND, and DRAM), analog…
• FY2025 10-K: …Ushio, Canon, GigaVis Co. Ltd. and PDF Solutions. Each of our products also competes with products that use different metrology, inspection or lithography techniques. Some of our competitors have greater financial, engineering, manufacturing and marketing resources, broader product offerings and service capabilities…

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.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• 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.