Last Update 03 Feb 26

Fair value Decreased 16%

BMI: Premium P/E And Share Repurchases Will Drive Future Upside

Analysts have trimmed their price targets on Badger Meter, and our updated fair value estimate moves from US$211.60 to US$178.70. They are factoring in slower expected revenue growth, a lower future P/E assumption, and a more cautious stance on the company's premium valuation and market setup.

Analyst Commentary

Recent research has turned more cautious on Badger Meter, with several bearish analysts trimming price targets and one firm initiating coverage with an Underweight rating. The common thread is concern about how much investors are being asked to pay for the stock relative to its growth outlook and market conditions.

Bullish Takeaways

Bearish analysts still describe Badger Meter as a solid company, which suggests confidence in the underlying business model and core execution, even as they question the share price level.
The specific price targets cited, including the US$157 initiation level, indicate that analysts are still assigning meaningful equity value to the company rather than writing it off as structurally impaired.
Coverage initiation itself signals that the company is important enough within water technology to warrant dedicated research, which can help keep investor attention on execution milestones and capital allocation decisions.

Bearish Takeaways

Bearish analysts highlight a difficult setup, pointing to a premium valuation versus other water technology names, which they see as creating an unfavorable risk or reward tradeoff if growth does not stay strong.
Several price target cuts, ranging from US$18 to US$49, reflect a broad reset in expectations around revenue growth, future P/E levels, and what investors are willing to pay for the current earnings base.
Research commentary flags a maturing market as a headwind, implying less room for acceleration in volumes or pricing, which can cap how much upside investors may be willing to underwrite in growth assumptions.
Concerns about utility funding constraints add another layer of caution around future order visibility, which can weigh on confidence in longer term growth and support for higher valuation multiples.

What’s in the News

Badger Meter announced a series of executive leadership changes effective January 1, 2026, including moving long time CFO Robert A. Wrocklage to Executive Vice President, North America Municipal Utility, with responsibility for sales, marketing, operations, and engineering in that segment (Key Developments).
Daniel R. Weltzien, currently Vice President, Controller, will be promoted to Chief Financial Officer, taking on oversight of financial strategy and management, accounting, external reporting, investor relations, and treasury, after nearly 25 years in corporate finance and public accounting (Key Developments).
The Board of Directors authorized a new share repurchase program that allows Badger Meter to buy back up to US$75 million of its shares, with the program running through November 30, 2028 (Key Developments).
The Board approved this buyback plan on November 7, 2025, indicating an intention to continue returning capital to shareholders alongside operating investments (Key Developments).
From October 1, 2025 to November 7, 2025, the company repurchased 82,448 shares, representing 0.28% of shares, for US$15 million, completing repurchases under the prior program announced on February 22, 2023 (Key Developments).

Valuation Changes

Fair Value Estimate reduced from US$211.60 to US$178.70, reflecting a lower assessment of what investors might consider a reasonable price.
Discount Rate adjusted slightly from 8.40% to about 8.36%, a modest technical change in the model rather than a major shift in risk view.
Revenue Growth revised from roughly 8.38% to about 7.41%, indicating more conservative expectations for future top line expansion.
Net Profit Margin nudged up from about 16.56% to roughly 16.73%, suggesting a small improvement in projected profitability.
Future P/E reduced from about 41.2x to roughly 34.7x, pointing to a less generous multiple being applied to Badger Meter's earnings outlook.

Strong demand for advanced water solutions and innovative IoT-enabled products supports higher-margin growth and strengthens Badger Meter's leadership in digital water infrastructure.
Acquisitions and ongoing investments drive new revenue streams and operational efficiencies, providing resilience against market fluctuations and ensuring sustained long-term profitability.
Exposure to macroeconomic, regulatory, and competitive pressures could create revenue volatility, margin compression, and uncertainty for future growth and profitability.

Catalysts

About Badger Meter

Manufactures and markets flow measurement, quality, control, and communication solutions worldwide.What are the underlying business or industry changes driving this perspective?

The increasing emphasis on water conservation and sustainable infrastructure is driving elevated demand from utilities for advanced metering and monitoring solutions; Badger Meter's continued success with its BEACON SaaS platform, BlueEdge suite, and recent SmartCover acquisition positions the company to capture a larger share of this growing market, supporting high single-digit revenue growth targets over the long run.
The rapid expansion and integration of IoT-enabled products and real-time analytics, as seen in the rollout of BEACON and new machine-learning-enabled products like Cobalt, are accelerating customer adoption of recurring, higher-margin software and data solutions-contributing to improved revenue visibility and ongoing net margin enhancement.
Anticipated operational synergies and commercial opportunities from the SmartCover acquisition and other organic investments are expected to drive outsized top-line and EPS growth as Badger Meter leverages its established customer network to cross-sell new offerings while improving cost leverage, especially in SG&A over time.
Continued technology innovation and differentiation in ultrasonic metering and beyond the meter water management solutions enhance Badger Meter's competitive standing, enabling premium pricing and structural gross margin expansion, even as the industry transitions to digital infrastructure.
Persistent government investment and regulatory mandates for water infrastructure upgrades, coupled with the mission-critical nature of Badger Meter's solutions for utility revenue integrity (meter as the cash register), are likely to support robust long-term demand, buffering cyclical risks and underlining long-term revenue and cash flow stability.

Badger Meter Earnings and Revenue Growth

Badger Meter Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Badger Meter's revenue will grow by 8.5% annually over the next 3 years.
Analysts assume that profit margins will increase from 15.5% today to 16.3% in 3 years time.
Analysts expect earnings to reach $182.2 million (and earnings per share of $6.13) by about September 2028, up from $135.7 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 47.8x on those 2028 earnings, up from 39.0x today. This future PE is greater than the current PE for the US Electronic industry at 23.9x.
Analysts expect the number of shares outstanding to grow by 0.2% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.14%, as per the Simply Wall St company report.

Badger Meter Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Ongoing macroeconomic and trade policy uncertainty, including fluid and potentially escalating tariff environments (such as tariffs on copper and other commodities), introduces unpredictability in input costs and supply chain management, which could negatively impact gross margins and earnings if price increases cannot fully offset rising expenses.
Continued reliance on large municipal AMI (Advanced Metering Infrastructure) projects exposes the company to lumpy, uneven revenue streams and elongated procurement cycles; delays or pauses in project rollouts could create quarter-to-quarter revenue volatility, limiting revenue predictability and potentially impacting earnings stability.
Higher SG&A expenses, fueled by acquisitions (like SmartCover) and ongoing investments in personnel and software development to support growth, risk outpacing revenue growth in the long term, putting sustained pressure on net margins if sales leverage does not materialize as expected.
Intensifying competition-including from larger diversified industrials and new technology entrants-could force greater R&D spending and pricing concessions, eroding Badger Meter's pricing power and market share, thus impacting long-term revenues and profitability.
Potential reductions in federal or state funding for municipal water infrastructure projects (e.g., EPA budget cuts or decreased access to state revolving funds), especially in North America, could result in decreased overall spending by key customers, limiting addressable market growth, slowing order flow, and constraining future revenue expansion.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $237.429 for Badger Meter based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $264.0, and the most bearish reporting a price target of just $219.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.1 billion, earnings will come to $182.2 million, and it would be trading on a PE ratio of 47.8x, assuming you use a discount rate of 8.1%.
Given the current share price of $179.44, the analyst price target of $237.43 is 24.4% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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