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Badger Meter In The Right Water Markets, But The Valuation Is Steep

Apr. 05, 2022 7:19 AM ETBadger Meter, Inc. (BMI)DHR, MWA, XYL3 Comments
Stephen Simpson profile picture
Stephen Simpson


  • Badger is leveraged to some of the more attractive growth opportunities within the water market, including water quality and loss mitigation.
  • Badger's remote sensors can provide real-time information about water quality, offering valuable information beyond periodic lab-analyzed sampling.
  • Utilities may finally be incentivized to upgrade to more sophisticated metering networks (and software packages), as they can help identify leaks and other system problems.
  • All of these positives appear amply reflected in the share price, and it's hard to see how Badger rerates substantially higher.

New installed water meter in bathroom

deepblue4you/E+ via Getty Images

For some time now, my refrain on water-leveraged industrials has been iterations of “yes, this is a good sector to be in long term, but the valuation more than reflects that”, and the sector has definitely pulled back and derated

This article was written by

Stephen Simpson profile picture
Stephen Simpson is a freelance financial writer and investor. Spent close to 15 years on the Street (sell-side, buy-side, equities, bonds); now a semi-retired raccoon rancher. That last part isn't entirely true. Probably.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (3)

Dividend Dolphin profile picture
Thanks for the article. How do you feel about the valuation at the current price?
jvincen2 profile picture
@Dividend Dolphin
Have owned Badger since 1995 and been a great investment so far. Put them in here and run the annual average return for 3,5,10 years against the market or ?


BMI is a dividend Champion now also and raises "split shares" when they do one, 4 for me so far. They have been around since 1905 when they invented the first freeze proof meter.

Right now a possible infrastructure boost if we ever do anything. And they remain a leader in flow metering which can cover other markets then water.
Author covered them well but better to think farther out with Badger, maybe start/add here and see what comes next. Upgrading systems can be done because the funds are there or doing it saves money in the long run.

I'm a SSD user simply safe dividends and they feel this way about a few things.

Dividend Safety 94 Very Safe

Latest 11% in Aug '21 Fast
Last 5 Years 12% per year Very Fast
Last 20 Years 9% per year Fast

"BMI's dividend yield is about in line with (8% off) its 5-year average, and the stock's forward P/E ratio sits near its historical norm. The stock looks reasonably valued for investors who believe in BMI's long-term outlook."

And I still do "believe in BMI's long-term outlook."

They are a David among some Goliaths and yet are still here 117 years later. BMI is a long term investment not a trade.
My TR vs SPY since July 1 1995 until now.

Average Annual Total Return
BMI 17.89%
SPY 9.31%

“The stock market is a device for transferring money from the impatient to the patient.” Warren Buffett.

Good luck to you either way seems 2022 will remain a bumpy ride.
Dividend Dolphin profile picture
@jvincen2 thanks for the info!
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