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Water control and measurement company Badger Meter (NYSE:BMI) in Q2 CY2026, but sales fell by 6.6% year on year to $222.3 million. Its GAAP profit of $1.02 per share was in line with analysts’ consensus estimates.
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Badger Meter (BMI) Q2 CY2026 Highlights:
・Revenue: $222.3 million vs analyst estimates of $221.8 million (6.6% year-on-year decline, in line)
・EPS (GAAP): $1.02 vs analyst estimates of $1.01 (in line)
・Operating Margin: 17.7%, down from 18.8% in the same quarter last year
・Free Cash Flow Margin: 9.8%, down from 17.1% in the same quarter last year
・Market Capitalization: $4.26 billion
Company Overview
The developer of the world’s first frost-proof water meter in 1905, Badger Meter (NYSE:BMI) provides water control and measure equipment to various industries.
Revenue Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Badger Meter grew its sales at an exceptional 13.6% compounded annual growth rate. Its growth surpassed the average industrials company and shows its offerings resonate with customers, a great starting point for our analysis.
Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Badger Meter’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 6.2% over the last two years was well below its five-year trend.
This quarter, Badger Meter reported a rather uninspiring 6.6% year-on-year revenue decline to $222.3 million of revenue, in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 8.9% over the next 12 months, an improvement versus the last two years. This projection is above the sector average and implies its newer products and services will spur better top-line performance.
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Operating Margin
Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.
Badger Meter has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 17.9%. This result isn’t surprising as its high gross margin gives it a favorable starting point.
Analyzing the trend in its profitability, Badger Meter’s operating margin rose by 3 percentage points over the last five years, as its sales growth gave it operating leverage.
In Q2, Badger Meter generated an operating margin profit margin of 17.7%, down 1.1 percentage points year on year. Since Badger Meter’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions.
Badger Meter’s EPS grew at 17.6% compounded annual growth rate over the last five years, higher than its 13.6% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
We can take a deeper look into Badger Meter’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, Badger Meter’s operating margin declined this quarter but expanded by 3 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.
Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.
For Badger Meter, its two-year annual EPS growth of 5.7% was lower than its five-year trend. This wasn’t great, but at least the company was successful in other measures of financial health.
In Q2, Badger Meter reported EPS of $1.02, down from $1.17 in the same quarter last year. This print was close to analysts’ estimates. Over the next 12 months, Wall Street expects Badger Meter’s full-year EPS to grow 14.2% from $4.27 to $4.88.
Key Takeaways from Badger Meter’s Q2 Results
We struggled to find many positives in these results. Zooming out, we think this was a mixed quarter. The stock remained flat at $146 immediately following the results.
Should you buy the stock or not? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).
