Badger Meter (BMI 10.66%) inventory jumped 10.7% on Thursday, following the water know-how specialist’s launch of better-than-expected outcomes for the primary quarter of 2023. Buyers’ delight is attributable to each income and earnings simply surpassing Wall Road’s expectations.

A virtually 11% post-earnings transfer in both course is not unusual amongst tech shares and different shares that are usually unstable. However such an upward transfer is comparatively uncommon — and thus, notably noteworthy — for a long-established, steady, dividend-paying industrial firm. 

Picture supply: Getty Pictures.

Badger Meter’s key numbers 

Information supply: Badger Meter. GAAP = usually accepted accounting rules. YOY = 12 months over 12 months.

Wall Road was searching for EPS of $0.55 on income of $143.6 million. So the corporate sped by each expectations.

Badger Meter generated money of $18 million operating its operations through the quarter. It has a wholesome stability sheet, ending the quarter with money and money equivalents of $128.3 million and no long-term debt.

What occurred with Badger Meter within the quarter?

• Water utility gross sales grew 20% 12 months over 12 months, pushed by continued sturdy adoption of the corporate’s mobile superior metering infrastructure (AMI) resolution and better water meter volumes. The acquisition of Syrinix (lined beneath) additionally contributed to gross sales development. 
• Move instrumentation product gross sales rose 22% 12 months over 12 months, with “sturdy order demand throughout the water-focused finish markets and bettering provide chain dynamics,” the corporate mentioned within the earnings launch.
• The corporate accomplished the acquisition of Syrinix at the start of the 12 months for $18 million. CEO Kenneth Bockhorst opined within the earnings launch that this acquisition extends the corporate’s “differentiated good water choices with stress monitoring and leak detection capabilities.”
• It had report backlog on the finish of the quarter, which is spectacular, given its sturdy and record-high gross sales within the quarter.

What the CEO needed to say

Here is a part of CEO Bockhorst’s remark within the earnings launch:  

We generated an all-time excessive quarterly income whole within the first quarter, delivering 20% gross sales development reflective of favorable trade fundamentals, wholesome demand for our revolutionary good water options, and excellent execution on the a part of our workers and provide base […]. This, in flip, led to working revenue margin enchancment, which additionally benefited from structural combine enchancment, value-based pricing, stabilization of inflationary pressures and promoting, engineering and administration (SEA) leverage.

2023 outlook

Within the earnings launch, the corporate provided a optimistic 2023 outlook, although offered no particular numbers. It mentioned that “demand tendencies in our markets stay wholesome” and “provide chain reduction and steadying inflationary headwinds, together with stable operational execution, lay the inspiration for margin resilience for the stability of 2023.”

Value a spot in your watch record

Badger Meter inventory deserves no less than a spot on most traders’ watch lists. Its operations closely (although not solely) fall inside one in every of my favourite broad teams — water. This can be a house with stable long-term development potential as a result of local weather change is inflicting recent water to turn out to be more and more scarce in america and internationally.

Not solely have shares simply outperformed the S&P 500 thus far this 12 months, however they’ve additionally executed so over the mid, lengthy, and very-long phrases. Furthermore, shares pay a modest dividend, which is at present yielding about 0.7%.